PRIVATE BUSINESS

Transas Group Bill (By Order)

Order for Second Reading read.
	To be read a Second time on Wednesday 18 June.

Oral Answers to Questions

INTERNATIONAL DEVELOPMENT

The Minister of State was asked—

HIV/AIDS (South Africa)

Peter Pike: What discussions the Department has had with representatives of the South African Government about tackling HIV/AIDS in South Africa.

Hilary Benn: Officials from the Department's Pretoria office hold regular discussions with their South African counterparts about the problems of HIV/AIDS in South Africa. Helping to tackle HIV/AIDS is one of our main priorities in the country, and we have recently approved a new £30 million programme.

Peter Pike: I congratulate my hon. Friend on his new position. As I am sure he knows, many people in South Africa believe that the true number of people with HIV/AIDS is well above the known, published figure, which is itself high. Many in the country also believe that the link between HIV and AIDS is not yet fully established, which makes our task of trying to help and to tackle this appalling problem even more difficult. What can we do to make such people face up to the issue and tackle it head on?

Hilary Benn: I thank my hon. Friend for his kind words. Let me also take this opportunity to thank my right hon. Friend the Member for Birmingham, Ladywood (Clare Short) for the integrity, commitment and passion with which she led the Department for six years. The esteem in which the Department is held in the House and across the globe owes a great deal to her achievements, and we are very grateful to her for all that she has done.
	My hon. Friend is right to mention the difficulties created by attitudes to HIV/AIDS in some quarters in South Africa, which are preventing an effective response to the problem. According to our best estimate, about 5 million people in South Africa are currently infected with HIV—one person in nine—although there have been changes in recent months, not least following last year's court ruling that pregnant women should have access to neverapine. That has now been implemented.
	I agree with my hon. Friend that we must work continuously with the South African Government in responding to the challenge, and that is what we are seeking to do. There is a good plan on paper, and we must provide support, along with other donors, so that it can be delivered in reality.

Alistair Burt: Let me also welcome the Minister to his post, and wish him well.
	I was in South Africa with the hon. Member for Burnley (Mr. Pike) in South Africa very recently. We visited Khayelitsha in Cape Town, which has grown from nothing to an area with a population of 1.2 million since 1985. We heard about the work of a woman dealing with child abuse—and its obvious consequences, including sexually transmitted diseases—in a desperately overworked clinic. Will the Minister ensure that the Department's money is spent on supporting such clinics at the grass roots, so that the message about HIV/AIDS and other sexually transmitted diseases reaches those in the greatest need in South Africa? Sometimes those people are away from the public eye and away from the established clinics. Work needs to be done to help those who are moving into shanty towns: that is where the need may be greatest.

Hilary Benn: I agree with the hon. Gentleman about the importance of ensuring that the message reaches all levels of society, especially those that are the hardest to reach. We are working on a national and provincial programme, in partnership with the South African Government and other organisations. Evidence elsewhere in Africa—Uganda being the best-known example—shows what can be done through a concerted effort by the Government and all parts of society to convey the message about the steps people can take to protect themselves, which in the long run is the most effective thing we can do to reduce this terrible scourge in South Africa, and indeed throughout sub-Saharan Africa.

Helen Jackson: I welcome my hon. Friend to his post. Does he agree that women play a key role when it comes to dealing with HIV/AIDS in South Africa and other countries? They can convey their knowledge of the illness to children, in the family and in schools. Can the Department take that into account, through its relationship with the Government and at other levels?

Hilary Benn: As my hon. Friend says, it is important to work with all parts of society but particularly with women, given their important role in the family. The court judgment that I mentioned, allowing access to antiretrovirals for pregnant women, will be widely welcomed.
	As my hon. Friend knows, an important part of the Department's work wherever we are to be found in the world involves working with women and giving them more opportunities to take control of their lives. Their contribution will also be important to the tackling of HIV/AIDS in South Africa and elsewhere.

Ethiopia

David Heath: If he will make a statement on humanitarian aid to Ethiopia.

Hilary Benn: The humanitarian situation in Ethiopia continues to cause serious concern, with 12.5 million people affected. High levels of malnutrition are reported in parts of the southern, Afar and Somali regions because of problems with the allocation and targeting of aid, and limited capacity to deliver medical supplies and food to those in need. DFID has provided £48.3 million since the start of 2002, and we are now focusing effort on improving delivery of support on the ground.

David Heath: I warmly welcome the hon. Gentleman to his new position.
	I do not want to emulate the language of Sir Bob Geldof, but is it not appalling that 14 million people are suffering from drought, 12.5 million need food support and 2 million have HIV/AIDS? Apart from the immediate support that we can offer, is there not a need to deal with the structural problems of Ethiopia, which means providing fair prices for its principal commodity, coffee, and fair access to the markets of the west? What are the Government doing to achieve that?

Hilary Benn: The hon. Gentleman is right about the situation in Ethiopia, although it needs to be said that, despite the serious concern about the situation there, we have not seen a repetition of the famine of 1984. Despite the difficulties that there have existed until now in getting support in, particularly from the European Union, which was an issue that Bob Geldof raised, that aid is now going in, although there are problems with supplementary feeding for those who are suffering from acute malnutrition.
	The hon. Gentleman is right. There is a perennial problem in Ethiopia and, as well as dealing with the immediate humanitarian need, all of us must focus our efforts on trying to solve the longer-term problem. The Department is trying to do that through its programme in Ethiopia, but the hon. Gentleman is right that the biggest single step that we could take to help poor people in poor countries is to open trade, particularly agricultural trade. That is why the talks in Cancun in September will be so important.

Tom Clarke: I welcome my hon. Friend back to DFID.
	I congratulate my hon. Friend and the Department on their contribution to the present crisis in Ethiopia but will he and his colleagues seek to influence the European Union towards preparing a strategy for long-term sustainable development, so that the problems in Ethiopia do not simply recur?

Hilary Benn: That is part of the programme that we are seeking to undertake. All donors who are working with the Government of Ethiopia have a responsibility to deal not just with the short-term but with the long-term problems. That will require a concerted effort. As I say, it is central feature of DFID's country assistance plan for Ethiopia, which was published in March.

Laurence Robertson: I congratulate the Government on the aid that they have provided to Ethiopia, but when I spoke to the Ethiopian ambassador just a few minutes ago, he told me that about 30 per cent. of the aid that has been pledged across the world has not yet reached Ethiopia. Will the Minister do what he can to speed up the delivery of that aid to Ethiopia? He is right to talk about achieving food security on a long-term basis in Ethiopia but, as he will appreciate, that country has a problem not of water shortage but of water management: irrigation systems are essential if it is to avoid famine.

Hilary Benn: As the hon. Gentleman rightly says, water management is a key issue for the future of the country. I assure him that we will continue to keep a very close eye on that and to ensure that the aid that has been promised is delivered. According to the World Food Programme, food needs for the remainder of 2003 are about 90 per cent. covered, if all the pledges are confirmed—that is the crucial point. That is why we need to maintain the pressure. We will look to other countries to help to cover the remaining gap. The UK has provided the £48 million to which I referred earlier.

Andy Reed: I visited coffee farmers in Ethiopia a few weeks ago. The collapse in commodity prices has had an enormous impact on them and their livelihoods. It is true—I hope that the Minister will be able to do much more—that the target has not been reached; there is a 30 per cent. shortfall. I am sure that the hon. Gentleman will do his best to ensure that not just this country but the international partners reach that target. Will he assure me that water management will become a key aspect of the Government's policy in Ethiopia because, as the hon. Member for Tewkesbury (Mr. Robertson) said, it is a question not of water shortage but of what is done with the water that is already there?

Hilary Benn: Indeed, and it is precisely for the reason that my hon. Friend outlines that a significant part of DFID's programme is devoted, so far as water management is concerned, to making sure that countries have in place the structures and systems to manage water effectively. It is a question of making supply available in parts of a country where there are difficulties, but in the long term it is even more important to ensure that Governments have the structures and systems in place to provide and maintain water, to replenish the system and to ensure that investment continues to be made in wells and other supply methods that have been put in place so that the problem can be dealt with in the long term.

Peter Luff: It is my pleasure, on behalf of the official Opposition, to welcome the hon. Gentleman back to the Department for his first Question Time since his rebirth there; I am sure that my hon. Friend the Member for Meriden (Mrs. Spelman) will have more to say about that later, if the opportunity arises.
	On humanitarian aid in Ethiopia, does the Minister recall the words of the Chief Secretary to the Treasury in Africa at the end of May? He said:
	"The EU undoubtedly has to do better on the delivery front."
	The Minister has been reminded of the words of Bob Geldof, who described the response of the EU as "pathetic and appalling". But does he remember that Bob Geldof was then slapped down by Glenys Kinnock, who speaks for Labour on international development in the European Parliament, for being "unhelpful and misinformed"? Who does the Minister think is correct: the Chief Secretary and Bob Geldof, or Mrs. Kinnock? And will he assure the House that the food supplies that are so desperately needed by the 12 million starving Ethiopians will reach them, and quickly?

Hilary Benn: I thank the hon. Gentleman for his kind words on my appointment. I am not sure that the conversation between those esteemed individuals is one with which I should necessarily join in, but what I will say is that everybody recognises that there have been delays in the provision of aid by the European Community. However, it has pledged 465,000 metric tonnes—a substantial amount and about a third of the total requirement—which is now beginning to come through. The reports that we have received demonstrate that the situation is improving, but the hon. Gentleman is entirely right: we need to maintain vigilance and pressure to ensure that the promised aid is delivered, and that the reform process in the EU, on which both sides of the House are in agreement, is carried forward so that we can deal with these problems more effectively in future.

Drinking Water

Jim Cunningham: If he will make a statement on the efforts being made in co-operation with the international community to increase the availability of clean water in the developing world.

Sally Keeble: One in five people currently lacks access to clean water worldwide. My Department is spending £87 million on bilateral programmes, focusing on improving water management and health education. We are also providing at least £40 million for multilateral initiatives to increase access to water.

Jim Cunningham: Given the Government's commitment to humanitarian aid for Iraq, can the Minister tell me whether there is a time scale for the delivery of fresh water?

Sally Keeble: We have taken substantial steps, which my hon. Friend will be aware of, to ensure that we provide aid to Iraq. Extensive work, supported by us, has been undertaken to ensure that the power supplies, which were a real problem, were reconnected so that the people could get water. I believe that the water supplies are now getting back to pre-war levels.

John Barrett: Given that 6,000 children die every day because of poor water supplies and poor sanitary conditions, and given that this week, reports from Oxfam, Care, and Save the Children have highlighted problems with the water supply to the children of Iraq, what will DFID do to deliver for those children?

Sally Keeble: I have already set out what we have done about the water supplies, and the steps that have been taken to reconnect the power to ensure that such supplies get through. We have also provided aid to several non-governmental organisations, including, I believe, UNICEF, to meet some of the needs of the children in Iraq. The hon. Gentleman is entirely right to point out the connection between water and child health—a problem that affects not only children in Iraq but children world wide. Some 2 million children die each year, quite unnecessarily, from diarrhoea-related diseases, which are almost entirely due to poor water supplies. It is not just about the supply and management of water; hygiene and sanitation needs are absolutely crucial. That is one reason why we are putting so much effort into tackling the need to improve sanitation levels, as well as into tackling the worldwide shortage of clean water.

Ann McKechin: My hon. Friend will be aware that the World Trade Organisation is currently discussing the liberalisation of services, including water distribution and supply. Does she agree that any negotiations must ensure that sufficient safeguards are in place to protect supplies to the poorest people in the world, and that the WTO should now adopt the millennium development goals?

Sally Keeble: My hon. Friend has set out some important issues in her question. It is entirely for Governments of individual countries to decide how to manage and organise their water supplies. Figures so far show that, by and large, virtually all the investment in water in the developing countries—about 68 per cent.—is in the public sector. Despite fears about the consequence of the liberalisation of water, comparatively little investment by the private sector in the developed world has taken place. When investment has been made, it has tended to be in management rather than infrastructure, about which most people are concerned. The main concern of the Department in increasing access to water is precisely to ensure that the most poor and marginalised people gain access to it. I can give my hon. Friend my complete assurance on that.

Martin Smyth: The Minister will be aware that Malawi has plenty of water, but needs to improve its water management. On the other hand, throughout all sub-Saharan Africa, local villages and small communities need that help. Is it not a fact that DFID is not too happy about supplying funds to some of the non-governmental organisations working in those areas, because the sums that they are looking for are too small? I understand, for example, that £2 million to help an education, AIDS and water programme was considered too little.

Sally Keeble: I am surprised at the hon. Gentleman's remarks. If he wants to make specific points, I would be grateful if he would make them afterwards and I shall ensure that they are followed up. The Department's approach to water deals extensively with management and education programmes rather than infrastructure. Our experience would go against what the hon. Gentleman says. I shall ensure that he receives a detailed reply to any specific points that he wants to raise.

Caroline Spelman: It should come as no surprise to the Minister that hon. Members on both sides of the House are drawing her attention to the chronic problems of securing a clean water supply in Iraq. At the International Development Committee yesterday, non-governmental organisations warned that there are already clear signs that cholera, dysentery and diarrhoea are on the increase. According to the former Secretary of State, the Government ignored the need to keep basic humanitarian services running when they were planning for the war. Will the Department now launch an inquiry into why preparations were so poor?

Sally Keeble: The issue of the Department's preparations has been covered many times. The hon. Lady knows how much finance was provided to NGOs specifically to prepare for the eventualities of war. She also knows that much of the money went into making preparations to deal with refugees and displaced people, though, mercifully, that problem has not arisen. We are aware of several cases of cholera and other diseases on the basis of information supplied by the World Health Organisation and other organisations operating on the ground. We examine such information closely. Without wanting to sound complacent, we are aware of the health problems that can arise at this time of year in Iraq, and we are taking stringent steps to improve services, particularly water. I understand that both power and water supplies are more or less back to the position that obtained before the war.

Cuba

Ben Chapman: If he will make a statement on aid to Cuba.

Sally Keeble: DFID does not have a bilateral programme in Cuba. There is a £120,000 small grants scheme, administered by the Foreign Office, which supports civil society projects. The EU currently provides $12 million of aid, and the Commission is reconsidering its engagement with Cuba, in the light of the human rights crisis there.

Ben Chapman: While much progress needs to be made in Cuba, not least in the field of human rights, the island has started on the road to reform. I do not condone recent events, but demonstrable progress has been made in the past 20 years. Would not that be built on by facilitating entry to Cotonou and by the development of a bilateral aid programme? Is it an instance in which the broad policy of aid for the poorest prevents us from helping a country that is making progress in development?

Sally Keeble: I acknowledge the work that my hon. Friend has done to promote relations between this country and Cuba. However, the issue—especially in relation to the EU—rests very much with Cuba itself. As he may know, it was Cuba that withdrew its application to join the African, Caribbean and Pacific group. We are currently supporting civil society, and the Cuba initiative deals with non-aid relations. It is for Cuba to deal with the human rights abuses and to reapply, perhaps at some future stage, to join the ACP group.

Gary Streeter: Would not the most important thing that we could do to help the people of Cuba be to use our newfound influence with the American Administration to persuade them to drop their trade and diplomatic embargo on that island—an embargo that should now be consigned to the dustbin of history? Would not that be the best way to ensure that the people of Cuba could look forward to the prosperity and stability that they so richly deserve?

Sally Keeble: If we are talking about aid from Europe, it is important that Cuba deals with the human rights abuses. A major project involving EU technical assistance is coming up on 26 June and, at present, the focus is very much on that. It would be a major step towards tackling some of the financial and banking issues on the island. One would hope that once the situation improved, the country could rejoin the international development community.

Mr. Speaker: Order. There is too much noise in the Chamber. [Hon. Members: "Hear, hear."] I thank all those who cheered. Perhaps they will now be quiet.

Occupied Territories

Huw Irranca-Davies: If he will make a statement on humanitarian needs in the west bank and Gaza.

Hilary Benn: Two and a half years of violence and closure have caused rapid economic and social decline. Many families have endured long periods without work or income, and many Palestinians now depend on food aid for their daily survival. Humanitarian assistance is helping to alleviate immediate suffering, but only a just political settlement will resolve the situation.

Huw Irranca-Davies: I thank the Minister for that answer, but one of the areas that is often overlooked is the issue of the new security fence. A World Bank report has shown that as many as 10,000 people have already been affected by disruption to water supplies and agricultural land. Some 95,000 Palestinians will be affected by the time the wall is completed. Will he please turn his attention to the humanitarian needs of those people who, once again, face dispossession in their own land?

Hilary Benn: My hon. Friend is right. The building of the fence is a symptom of the problem. It is estimated that it will leave 290,000 Palestinians on the wrong side and will cut communities in two and separate people from their livelihoods. That reinforces the point that I made earlier: only a political solution will deal with the problems that the Palestinian people are experiencing.

Caroline Spelman: I welcome the Minister back to this brief, but I wish to place on record the fact that we would have liked the Secretary of State to be a Member of this House. However, I congratulate him on his promotion.
	The real progress now being made on the road map for peace in the middle east has taken Ariel Sharon and Abu Mazen to positions that their supporters might never have imagined being achieved. We need to support those who share the common ground of wanting peace against the extremists on both sides who would like to derail it. Does the Minister agree that the Government must do all in their power to buttress that delicate process, and that our aid must strengthen the negotiators' fragile position?

Hilary Benn: I thank the hon. Lady for her kind words—not least because they give me the opportunity to congratulate my noble Friend Baroness Amos on her much-deserved appointment to the post of Secretary of State. We are looking forward to working with her. I agree with the hon. Lady when she talks about the importance of supporting the road map process. As I am sure she will recognise, my right hon. Friend the Prime Minister has played a very significant role in supporting that work, as has President Bush.

PRIME MINISTER

The Prime Minister was asked—

Engagements

Angela Watkinson: If he will list his official engagements for Wednesday 11 June.

Tony Blair: This morning, I had meetings with ministerial colleagues and others. In addition to my duties in the House, I will have further such meetings later today.

Angela Watkinson: Will the Prime Minister confirm that the Minister for Europe spoke for the Government when he said that the prospect of a deal with Spain over the sovereignty of Gibraltar was simply zero?

Tony Blair: The Minister certainly did speak for the Government. However, what he actually said was that there could be no question of any deal going through without the consent of the people of Gibraltar. We have always made that clear. That remains the position. I have said it myself, and the Minister for Europe said it too.

Laura Moffatt: Change is often difficult to handle, for our constituents and for those delivering public services. Does my right hon. Friend agree that the deal struck between West Sussex county council and Crawley borough council to deliver a stunning new secondary school and new facilities for leisure in my constituency represents the sort of change that will deliver our public services?

Tony Blair: The investment in my hon. Friend's constituency is matched by investment across the whole country. In terms of capital funding, we as a country are now spending about four or five times what was being spent when this Government came to office. As a result of that, we have the best school results—at primary level, and in GCSEs and A-levels—that the country has ever seen.

Iain Duncan Smith: The Chancellor said on Monday that he would wait until next year and then see whether his tests on the euro had been met. Surely the Prime Minister would agree that his policy is now wait and see?

Tony Blair: It is, as the Chancellor described, to take the preparations necessary to make sure that Britain is in a position, should the economics be in the right place, to join the single currency.

Iain Duncan Smith: So the Prime Minister confirms that the policy is now wait and see. I remind the Prime Minister of what he used to say about the self-same policy. He said that it led to
	"paralysis in the Government—even the big man of the Cabinet cannot get his way. The Government are weak, divided and are being pushed around by their factions."
	So there it is. In his own words, the Prime Minister's policy is weak and uncertain. However, British business needs certainty. Will the Prime Minister now tell us whether his deal with the Chancellor means that next year's Budget will be the last chance of this Parliament to trigger an assessment of the euro?

Tony Blair: We set out the measures that will be taken over the next year, and said that we would return to the assessment in the Budget. [Hon. Members: "Answer!"] Well, I am absolutely amazed that the right hon. Gentleman should return to the scene of the last Conservative Government, because who was the person creating all the trouble? I thank him for this question—I do not know whether it was planted by my right hon. Friend—as it gives me the opportunity to read out what he was saying at the self-same time. He said:
	"The public is ready to go for Britain repatriating its powers from the EU"—
	I see Opposition Members nodding in agreement—
	"which could eventually mean pulling out."
	That was the right hon. Gentleman's policy then. The truth is, it is his policy now.

Iain Duncan Smith: The only person in this House who has stood on a manifesto to get out of the European Union is the Prime Minister. Having attacked the last Government for their policy of wait and see, it is he who has now adopted the very same policy. His failure to answer the specific question of whether next year will be the last chance to trigger an assessment shows that we will have exactly what the Chancellor foretold six years ago—a running commentary that will damage British business.
	Let me remind the Prime Minister that he used to say that we can have unity without clarity, or clarity without unity, but we cannot have both. Has the Prime Minister at last discovered the third way—no clarity, no unity and no credibility at all?

Tony Blair: What we have set out is why the benefits of the single currency are very clear. We have set out the obstacles remaining to British membership, and we have set out a way of removing those obstacles.
	The right hon. Gentleman talks about the evidence for British business. Let me tell him what would be a disaster for British business—withdrawing from the European Union. If he says that that is no longer his policy, perhaps he will explain why he was a member of CAFE—Conservatives Against a Federal Europe—which said:
	"If it is not possible to attain these ends by negotiation, we must withdraw from the European Union".
	He was a member of that organisation, was he not? This is what it says on its website now:
	"Conservatives Against a Federal Europe has closed down and will remain closed while Iain Duncan Smith is leader of the Party."
	In other words, the only reason it has closed down is that the lunatics have finally taken over the asylum. The disaster for British business and Britain is the policy that the right hon. Gentleman actually believes in.

Hon. Members: More, more!

Mr. Speaker: Order.

Howard Stoate: My right hon. Friend will be aware that issues such as antisocial behaviour and policing levels are important to communities such as mine. Will he set out his policy on how he will reduce crime and ensure that the police on our beats are increasing in number, not just now but in future?

Tony Blair: The most important thing, which is why I hope that the Anti-social Behaviour Bill gets the support of the whole House, is to give the police the powers that they need, and, in particular, to put in place fixed penalty notices for those who commit antisocial behaviour and to support drugs proposals that, in the country's main crime areas, will mean that we have a proper testing facility for all those people who are arrested for the main criminal offences. If they are tested positive, they can then be referred for treatment; if they refuse to take treatment, that can be taken into account when bail is applied for. I hope that the whole House will support those proposals, which will be important in giving the police the powers that they need.

Charles Kennedy: As and when the Select Committee on Foreign Affairs conducts its investigation into Iraq's weapons of mass destruction, if the Prime Minister and Alastair Campbell are invited to give oral evidence, will they?

Tony Blair: There are two inquiries. One is in relation to the Intelligence and Security Committee, and I met it yesterday and made it clear that we will co-operate in any way at all. In relation to the Foreign Affairs Committee, in accordance with convention, I will not, and nor will officials, attend that Committee. The Foreign Secretary will, as will the permanent secretary to the Foreign Office. That is entirely in line with convention, but I may point out that, by dint of appearing in front of the Select Committee on Liaison, I am the first Prime Minister to have appeared before a Select Committee?

Charles Kennedy: Given the massive and understandable interest in all that, if the principal players involved do not appear in the public gaze to give their evidence, will that not simply underscore the view, which has wide support in all parties in the House, that there should be an independent judicial review?

Tony Blair: The proposal that the Foreign Secretary and the permanent secretary should go to the Foreign Affairs Committee is entirely in line with convention and practice. Again, let me say to the right hon. Gentleman in relation to the allegations that have been made that, as I pointed out in the House last week, there is not a shred of truth in any allegation—

Charles Kennedy: I am not making any.

Tony Blair: He could have fooled me. He has been making a few allegations. The fact is that there is no truth in them whatsoever. If there is any evidence to justify those allegations, it should be brought forward.

Brian Iddon: When the Berlin wall was constructed, the international community protested vigorously. Why have its protests been so muted about the building by the Israelis of a 217-mile-long wall on Palestinian soil? Does my right hon. Friend agree that if the Israelis are really serious about peace they should stop building that wall now?

Tony Blair: It is precisely because we want to see the situation change, including removing security measures like that, that we are engaged in discussion with the Israelis and the Palestinians to try to ensure progress. I am sure that my hon. Friend would also agree that it is important, as part of that peace process, that the Israelis be given proper guarantees about their security. It will be very difficult to make progress in that area, but I am sure that the only way to do so is the way that President Bush described, so that we have an end point, which is the two-state solution, and a series of measures in respect of both security and then lifting the restrictions to enable law-abiding Palestinians—the vast majority—to go about their daily business. However, that has to be negotiated. I understand the concerns about the security fence, but the only way to make sure that those things are off the agenda is to get a proper peace process moving forward.

Patsy Calton: Does the Prime Minister believe that the risk of terrorism in the UK is greater or less since the war with Iraq?

Tony Blair: I think that there is a risk of terrorism the whole time, irrespective of the war in Iraq. The best evidence and proof of that is where some of the most recent appalling terrorist acts have taken place. As far as I am aware, Morocco was not a great supporter of the war in Iraq, but it was subjected to brutal terrorist assaults. There is no way in which those terrorists can be appeased. Trials of people connected with al-Qaeda are happening all over Europe, in countries that supported the United States of America and in countries that did not. By hiding away at the back on any of these issues, we are not going to stop the terrorists; we shall only stop them when we confront them and defeat them.

Mark Todd: On Monday, among other events, a new block of school buildings opened in Swadlincote, in my constituency. More than half the schools in my area have received capital investment over the last six years—compared with the misery of Tory rule. However, in a fast-growing area such as South Derbyshire, which is attracting more and more people to it, we desperately need to sustain that investment. Can my right hon. Friend assure me that that is what we can expect?

Tony Blair: The investment will be sustained, as a result of the measures that the Government have put in place in the comprehensive spending review. In Derbyshire, for example, capital spending has increased from about £5 million to well over £60 million. That is precisely the difference between a Labour Government who believe in investing in education and a Conservative party with a policy of 20 per cent. cuts across the board.

Iain Duncan Smith: Given the Prime Minister's answer to his hon. Friend the Member for South Derbyshire (Mr. Todd), perhaps the right hon. Gentleman will tell us how many teachers are facing redundancy right now?

Tony Blair: According to the Department for Education and Skills, there are about 500 net redundancies. We are looking carefully at each of those, however, to see where the local education authority or the Department can help. I point out to the right hon. Gentleman that there are about 25,000 more teachers in place than when we came into office.

Iain Duncan Smith: I remind the Prime Minister that the figures that he has given are from only the third of schools that have declared their position so far. The estimates show that at least 800 teachers face the sack as a direct result of the funding crisis. When the Secretary of State for Education and Skills said that
	"the overall level of redundancies . . . will be of the same order as in past years"—[Official Report, 22 May 2003; Vol. 405, c. 1136.]—
	will the Prime Minister confirm that he was not telling the truth?

Tony Blair: I will not confirm that at all. It is correct that every year there are teachers who are made redundant, and the estimates that I have given are the correct estimates. Of course it is true that certain schools in certain parts of the country have faced real funding problems, partly as a result of increasing costs, partly as a result of the changing of the formula. However, overall the position is as I have described, which is that there has been a very large increase in school funding.

Iain Duncan Smith: Increases in national insurance, problems over the funding—it is down to the Government. And the Education Secretary was simply not telling the truth. The reality is that the figures for redundancies are that, this year, three times as many will face the sack as last year. So the Education Secretary, as ever, first tried to blame schools, and then when that failed he tried to blame councils. Surely he now has only himself to blame.
	Six years ago the Prime Minister promised to make education his first priority. Now the Government are sacking teachers. Should not the Prime Minister immediately get to the Dispatch Box and apologise to parents, teachers and governors for this, his crisis?

Tony Blair: First, as I say, it is important to get the issue in context. Actually, it is a small minority of the schools that are affected but some have been affected seriously. We are looking, with their local education authorities and those schools, at what we can do to help. The right hon. Gentleman says that we have let down the education system over the past few years, but let me remind him that, by contrast with the situation that we inherited in 1997, we have not just 25,000 more teachers but 80,000 more support staff. We have the best primary school results that we have ever had, the best GCSE and A-level results and the largest ever capital programme.
	It is true that, as a result of the pressures on costs, not least the one-off payment on pensions, there have been real difficulties for some schools, but the answer to that cannot be the right hon. Gentleman's policy of opposing the extra investment in schools and imposing a 20 per cent. cut across the board. Perhaps he can tell us how such a policy could possibly help any of the schools in financial difficulties.

Margaret Moran: While visiting new mums at the new maternity ward at the Luton and Dunstable hospital on Friday, we were delighted to hear of an extra £1.6 million Government funding for a new operating theatre. However, is my right hon. Friend aware that Luton has one of the highest levels of child mortality and heart disease and inherited one of the lowest levels of funding? Will he, when he reviews the fair funding formula, ensure that it is fair, and in the meantime, encourage his health colleagues to dish out some extra dosh so that we can more rapidly tackle the legacy of health deprivation and underfunding that we inherited from the Tory Government?

Tony Blair: My hon. Friend will know that the primary care trust had a real-terms increase of, I think, almost 8 per cent. in its funding, but obviously there is still a lot more to do, which is why that substantial funding increase is to be maintained in future years. But it is worth pointing out that her story of improved facilities at her local hospital is replicated in many constituencies in the country, and that whatever the difficulties, both on out-patient waiting and in-patient waiting, all the indicators are in better shape than in 1997. In the cardiac and cancer fields in particular, there has been massive improvement, and overall the NHS is performing more operations and seeing more people than ever before. There is a long way to go, but it is simply not true to say that the NHS is not making progress.

Edward Leigh: Does the Prime Minister agree with the assertion that the fundamental moral and legal justification for the invasion of Iraq was the possession by that country of weapons of mass destruction, posing an imminent threat to its neighbours, and that whilst regime change is very welcome, of itself it is not justification for the invasion of a sovereign country?

Tony Blair: It is precisely for those reasons that we set them out in United Nations resolution 1441 and that we passed the resolution in the House. I have to say to the hon. Gentleman, as I have said to other hon. Members, that the Iraq survey group, which is the body charged with looking into the issue of weapons of mass destruction in Iraq, is starting its work now; surely the best way of dealing with this is to wait until it has accumulated the evidence and then we can discuss and debate it.

Brian Jenkins: My right hon. Friend the Prime Minister has delivered many extra resources to education, and in my part of the world—in Staffordshire and specifically in Tamworth—we no longer have leaking roofs or outdoor toilets and conditions have been far, far better. However, will he explain to the parents of children in Staffordshire why Staffordshire is still at the bottom of the education funding league and why teachers are still having to be made redundant? If we sent the cash, what is the problem?

Tony Blair: I think that my hon. Friend would allow that we have increased investment in Staffordshire very considerably. He knows the debates that will always continue about the proper way in which the grant is distributed, and I also know that there have been particular problems in particular schools in Staffordshire. Again, I think that he would agree with me that when taken as a whole over the past few years, there has been a massive increase in capital and revenue spending in Staffordshire. We will obviously look at the problems to which he has drawn attention, but it is worth pointing out that in Staffordshire—and elsewhere—as a result of that investment, we have had record school results throughout the county.

Andrew Mitchell: Can the Prime Minister explain to the House what damage is being done to Britain from remaining outside the euro?

Tony Blair: If the economic conditions were met and Britain did not go into the euro, Monday's assessment spelled out very clearly what the damage would be in terms of lost trade, lost investment and lost living standards for our consumers. But, of course, the economic conditions have to be met.

Andrew Dismore: May I remind my right hon. Friend that hundreds of people are killed needlessly every year in accidents at work and that many others have their lives claimed by transport disasters? The public are outraged by the failure of the justice system to bring those responsible before the courts. I welcome the Home Secretary's recent announcement of a draft corporate manslaughter Bill. Will my right hon. Friend do all that he can to ensure that that Bill becomes law as quickly as possible so that we can create a powerful incentive for big business to take health and safety as seriously as the need to make profits?

Tony Blair: That is important, obviously, and the Government will publish proposals for legislation by the end of the year. It is important to point out that the proposals are directed at the corporations themselves, which is the area of weakness in the current law. The criminal liability of individual directors will not be targeted by the proposals. However, I must tell my hon. Friend that I know the strength of feeling on the issue, which is why it is important that the proposals be brought forward.

Andrew Selous: Does the Prime Minister understand the widespread concern expressed to me by a number of my constituents about the need for equal treatment of parents in access disputes? Is he aware that some fathers have had to go back to court 30 or 40 times to have straightforward access agreements honoured? Will he ensure that the new powers to deal with the issue that were proposed to the Lord Chancellor by the advisory committee some 16 months ago are implemented without delay?

Tony Blair: I will certainly look into the point that the hon. Gentleman makes. Obviously, the primary responsibility is on the courts to decide on access, but certain proposals were put to the Lord Chancellor for change. I shall find out the precise state of those proposals now and write to the hon. Gentleman about that.

Martin Linton: Has my right hon. Friend read the Treasury documents on the euro—[Laughter]—that say that if we had joined the euro in 1999, unemployment would now be higher but that if we ruled out joining for all time, we would lose out on trade and growth benefits valued at £3 billion a year? Does he agree that he was therefore right to reject the policies of both the Liberal Democrats and the official Opposition?

Tony Blair: I do agree with my hon. Friend. Leaving aside the Liberal Democrats' policy, it would be absolutely disastrous for this country to be in the "never" position of the Conservatives. They are now in the position that even if it were shown to be in the interests of the country to join in terms of jobs, stability, industry and trade, they would refuse, as a matter of dogma, to do so. That is not a serious policy for government.

Annabelle Ewing: The Prime Minister will be aware, with respect to the European constitution, that there are current proposals to endow, by constitution, exclusive competence to the EU on fisheries. Have the UK Government written to the EU to oppose the proposals? If they have not done that, why did Scotland's First Minister tell the Scottish Parliament two weeks ago that they had?

Tony Blair: We have had a common fisheries policy for many years, as the hon. Lady knows. Although some say that it would be good for Britain to withdraw from it, I do not believe so. There are real problems with the depletion of fishing stocks, which have to be addressed by the policy proposals that are being put forward. The common fisheries policy has always been decided in Europe.

Ronnie Campbell: A recent report by the European Central Bank called for a comprehensive review of the state-funded health service. It also called for a move towards an insurance-based health service. Is that not another case of bureaucrats—unelected, faceless—telling member states what to do and what not to do?

Tony Blair: I am not entirely familiar with the report to which my hon. Friend draws attention, but I can assure him that the health spending of this Government is well protected thanks to the proposals in the comprehensive spending review. It is just as well to point out that our aim is to get this country up to the level of European health spending. So I think it would be rather odd if people were to suggest that high levels of health spending were somehow inconsistent with membership of the single currency.

David Heathcoat-Amory: The Chancellor has reaffirmed that there will be a referendum on the euro eventually. Why then is the Prime Minister ruling out in advance a referendum on the European constitution, whatever the constitutional changes or implications may be? What is the logic or sense in that?

Tony Blair: What I am saying is that the Convention does not in fact put forward proposals that fundamentally alter the constitution of this country. [Interruption.] No, they do not. What I have also said, which is true, is that people like the right hon. Gentleman, who as a matter of fact is advocating a referendum irrespective of the outcome of the intergovernmental conference, see that—he has to be honest about this—as the first stage to getting Britain out of the European Union.
	Let me read what the right hon. Gentleman, who is a member of the European Convention—is that not right?—said just a few weeks ago:
	"The very nature of the European Union is incompatible with democracy and accountability".
	He also said that it was time for Britain to step back and become an "associate" member of the EU. He nods. That is the true agenda of a very large part of the Conservative party today. They should have the honesty to come out and say that that is their position. Perhaps then we could have an honest debate in this country about the European Union.

Barbara Follett: Will my right hon. Friend give priority to an issue that is making the lives of some of my constituents a misery, especially on these long, hot summer nights? Despite a very welcome decrease in overall crime in Stevenage, youth nuisance is still causing a great deal of trouble.

Tony Blair: I am pleased that my hon. Friend says that crime overall has fallen. Measures on antisocial behaviour will be taken forward by the legislation that we will introduce in the House. I do not know whether these apply in Stevenage, but last year, for the first time, we ran throughout the country summer schemes for young people. As a result, the number of robberies declined by more than 30 per cent. in the areas where the schemes applied. It is important that this year we extend those schemes as far as possible throughout the country.

Michael Spicer: With respect to the European Convention, how can something that sets up a single foreign policy, a single defence policy, a single economic policy, a single social policy, a single police force, a single judiciary and a single Convention be a tidying-up exercise?

Tony Blair: Because it does not: that is the central point. Foreign and defence policy is going to remain with member Governments. It is not going to be transferred to the European Commission. It will still be dealt with by unanimity. Therefore the case that somehow we are about to hand over British foreign policy or defence to the European Union is simply not true.
	The truth about the hon. Gentleman's position is that he too is someone who wants to renegotiate Britain's essential membership of the European Union. That is right—he nods. At least he is honest about it. Let us be quite clear about this. The reason why some Opposition Members want a referendum on the Convention is not that they seriously believe that it is about to give away foreign and defence policy, but that they want to paralyse the European Union as the first step to getting this country out of Europe. That is the true argument. Labour Members are going to join in that argument with relish, because it is not patriotic. It is not in the British national interest; it is a betrayal of the British national interest.

Dai Havard: Given that it is the season of reshuffles—[Hon. Members: "Give him a job."] Not in the running. However, I would like to ask a question about the future position of the Secretary of State for Wales. There is a lot of talk about retaining a voice for Wales in the Cabinet, and I would like an assurance that that will be done by keeping an independent Secretary of State in any reshuffle. Who has the job is a different matter—that is for the Prime Minister—but the process is more important than the person.

Tony Blair: I am afraid that in relation to all those questions my hon. Friend will have to wait.

Occupational Pensions

Andrew Smith: rose—[Interruption.]

Mr. Speaker: Order. Hon. Members must leave the Chamber quietly.

Andrew Smith: Thank you, Mr. Speaker. With permission, I wish to make a statement on action that the Government propose to take on occupational pensions following the Green Paper.
	Our proposals build on the historic strength of the UK's voluntary system—the partnership between Government, individuals and employers which has seen pensioner incomes rise faster than average earnings over the past 20 years, but which now faces real challenges as people are living longer at a time when birth rates are falling. Although the UK is well placed compared with other countries to deal with that, still more needs to be done. People need to be able to plan for their retirement and make informed choices about how and when to save, and how long they work so that they get the income in retirement that they expect. We will make further announcements in due course on the suite of Sandler products; a better deal for those who take their state pension later; and on the proposals outlined in the tax simplification review.
	Today, however, I want to focus on occupational pensions because they are under pressure now and we need to take early action. I am therefore setting out a balanced package of reform that better focuses regulation on things that people are most worried about so that we can cut burdens on business and increase member confidence in pensions. We will strengthen the protection of pension rights that people have built up to make sure that rights promised are rights delivered. Getting that balance right means taking a tough look at areas where regulation has grown out of all proportion. It also means taking action to deal with the demands of an increasingly dynamic economy in which companies are taken over and people move between jobs more frequently.
	In February, we tackled the challenge of two-tier work forces to extend protection of pension rights to new starts working in many previously public enterprises. However, it must be wrong that solely because of a takeover workers in any private company have their rights scrapped. That is why I can announce that we are extending the protection of pensions provided by TUPE—the Transfer of Undertakings (Protection of Employment) Regulations 1981—to private sector transfers. We will insist that where pension rights have been established, the new employer will need to match employee contributions up to 6 per cent to a stakeholder pension or offer an equivalent alternative. That is a fair adjustment. It builds confidence in pensions and reflects company best practice. To provide security for a more mobile work force, we will help people build up rights in short-stay jobs by enabling them for the first time to take with them the full pension that they have built up to another scheme.
	I am clear that in a voluntary system, such protection of rights must be balanced with measures that make it easier for companies to set up and run good schemes for their employees. As I have stressed before,
	"Pensions simplification has to be at the heart of any strategy to encourage greater pension provision."—[Official Report, 11 July 2002; Vol. 388, c. 1053.]
	In a voluntary system we must be mindful of the costs for providers. Over the years regulation has built up, often for the best intentions, into a layer cake of complexity. That cannot be right. If we are to make the voluntary system work more effectively, we need to make sure that regulation is well targeted and effective.
	That is why I can confirm today that we will be driving ahead with measures to cut regulations and costs on companies running schemes. We will replace the minimum funding requirement with scheme-specific funding arrangements. We will simplify and consolidate legislation in key areas to make it easier to administer pension schemes and, taking account of consultation responses, we will go further than we signalled in the Green Paper. We will radically reform section 67 of the Pensions Act 1995 to give schemes more freedom to adapt to changing circumstances without closing or even having to wind up. I am also taking forward a raft of specific simplification measures, such as streamlining the requirements on member-nominated trustees, improving dispute procedures, ending the requirement to offer additional voluntary contributions, and introducing less bureaucratic reporting arrangements.
	I have received submissions from the Pickering review and others that we should abolish compulsory inflation indexation because the requirements are too onerous and expensive. Although some important points have been made about the knock-on effects of costs putting schemes at risk, I do not believe that we should do away with indexation. However, guaranteed indexation of 5 per cent. was proposed in 1995, when market long-term expectations of inflation were at 5 per cent. Today, because of the stable macroeconomic environment that this Government have put in place, inflation has been driven down to average just 2.4 per cent. over the years since 1997. That means that under present arrangements, we are effectively forcing purchase of more than full inflation cover, which may be disproportionately expensive.
	I therefore propose that the cap on mandatory indexation will now be set at 2.5 per cent., giving schemes and their members more flexibility to agree together on the form of pension that suits them best, easing funding pressures and helping to keep schemes open. I stress that there will be no effect on the value of today's pensioners' rights. It is a measure for future accruals only, to give more freedom to design schemes in the most sensible way. I can tell the House also that we will keep survivors' benefits—the requirement for contracted-out schemes to provide for widows, for example—because making any change here would have a bad effect on women's pension prospects, in particular.
	With increased flexibility, we need to make sure that employees' rights are protected without employers winding up their schemes as a result, so I can announce today that we will set up a new, proactive pensions regulator to focus on tackling fraud, bad governance and poor administration. It will adopt a more proportionate approach, making sure that members are protected, while reducing burdens on well-run schemes.
	Pensions are a voluntary partnership and it is for workers and employers to decide on what type of scheme suits them best. We have seen welcome examples in recent months of employers and trade unions deciding together how best to ensure continuing high quality provision, and we set out in the Green Paper a proposal to require employers to consult scheme members before making changes. I can confirm that, working with my right hon. Friend the Secretary of State for Trade and Industry, I will be taking this into effect, requiring consultation to strengthen partnership in pensions.
	Examples of good practice are too often over-shadowed by cases where employers have gone back on promises, causing anxiety. People also worry about the get-out clause that lets solvent companies which could afford to keep their pension scheme running wind it up with inadequate compensation.
	In the cases where firms have done that, it has inflicted untold damage on confidence in the whole system. People worry that other schemes will follow suit. We need to act to make sure that a pension promise made by employers is a pension promise honoured by employers. We will therefore strengthen member protection where solvent employers decide to wind up their pension scheme.
	I have placed in the Library draft regulations to apply to schemes that are winding up from today. As from now, trustees will have the power to make solvent employers who choose to wind up their schemes buy out members' accrued rights in full. That will greatly increase security for members of solvent schemes. But there is one further issue that we must tackle.
	Sometimes, when firms go bust, the money is not there to meet pension commitments. Recent cases have shown the terrible injustice when that happens, and the public are right to demand action. We should not accept that just because a firm goes out of business workers can find that a pension that they have saved in for all their working lives becomes worth next to nothing.
	Our Green Paper set out options for sharing out assets more fairly. Today I can announce that we will change the priority order to give greater weight to those who have been in schemes and making contributions the longest. We will lay draft regulations on that shortly. I hope that the hon. Members for Havant (Mr. Willetts) and for Northavon (Mr. Webb) will welcome the cross-party agreement that I believe that there is on that point.
	But we need to go further. Ever since I started looking at this I have asked why, if people expect their holiday provider or motor insurer to be covered if the firm goes bust, there is no cover for something as important as an occupational pension. We will therefore legislate to set up a pension protection fund. That fund will take over the schemes of insolvent companies to ensure not only that pensions in payment are protected, but that those still working can be sure of getting 90 per cent. of what they were promised. It will be paid for by a fixed-rate levy and an additional risk-related premium, which, together with a salary cap, will minimise perverse incentives and moral hazard. The fund will be a non-Government body. It will meet its obligations through the power to set and vary the level of charge without recourse to public funds. Taken with the other measures, that is a big extension of pension security, for the first time guaranteeing protection if a company scheme goes bust.
	I have always said that my aim is to build a wide and deep consensus in this country that embraces employers, employees and pensioners. This is a balanced package to reduce costs and complexity of regulation, making it easier for employers to run schemes while ensuring that pensions promised are pensions delivered. Many of the proposals will require legislation, which the Government will bring forward as soon as parliamentary time allows.
	These measures will protect the pension rights of millions of pensioners and employees throughout Britain and I commend the statement to the House.

David Willetts: I draw the attention of the House to my entry in the Register of Members' Interests.
	I regret that the House has had no opportunity to debate the Government's proposals in their Green Paper last December. We have regularly called for such a debate. My hon. Friend the Member for North-East Hertfordshire (Mr. Heald) pressed the then Minister for Pensions, the right hon. Member for Makerfield (Mr. McCartney), in the days when we had such a Minister, for such a debate, but he was told by the Minister, in his inimitable style:
	"Don't be so silly. The Government are committed"—[Official Report, 20 January 2003; Vol. 398, c. 58.]—
	to a debate on the subject. We have not had a single debate in Government time on pensions for three years. We have had debates in Opposition time and in the House of Lords, but for three years the Government have not come to the House to debate pensions, and that is something that we very much regret. There has been no debate because there has been no policy, and now, of course, there is no Minister for Pensions either. Meanwhile, the crisis in pensions has been getting steadily worse. In fact, since the Secretary of State took on his responsibilities, 41 per cent.—nearly half—of all pension schemes have closed to new members. That will be the judgment on his tenure in office. One of the saddest features of that is manifested in the many invitations to conferences on pensions that pass across my desk. Unlike the Secretary of State, I actually go to them. They have titles like "Effectively Closing and Winding up Pension Schemes", which took place in January at the Park Lane hotel, and "Closing and Winding up Pension Schemes for Solvent and Insolvent Employers", at the Café Royal, London. That is a sad commentary on the state that occupational pensions have reached.
	All that we have had from the Government is an endless flurry of activity, while nothing changes. There have been 39 consultations, including Myners, Sandler, Pickering and Turner, targets, reviews and taskforces. Meanwhile, the inexorable process of the collapse of one of our great post-war successes—funded occupational pensions—has carried on apace. That is because of the weight of regulation and taxation that the Government have imposed. Why did the Secretary of State say nothing about the problems that the Government have themselves created over the past six years, particularly—I see that the Chancellor has already headed off—the £5 billion a year tax that they imposed on our pension funds? It is no good talking about security now: it was the Government who created the insecurity that is the problem.
	Can I ask the Secretary of State for a straight answer on the most basic question of the lot? Does he accept that there is a crisis in British pensions? I am not even asking him to say that it is all the Government's fault, but does he recognise that there is a problem? Will he acknowledge that we face nothing less than a crisis? The "Crisis? What crisis?" mentality that we have had from the Government for the past six years has made a bad situation worse.
	Does the Secretary of State recognise the overwhelming consensus from all the leading organisations that responded to his Green Paper that the Government need to reform state benefits? Many of those organisations, including Age Concern, Help the Aged, the National Association of Pension Funds, the National Consumers Council, said that unless the spread of means-tested benefits is tackled, people will have no incentive to save for their retirement. Why, yet again, did the Secretary of State say nothing about that fundamental need to reform state benefits?
	Why, also, did we hear nothing about the need to improve incentives to save? There is no point in imposing extra obligations unless people can see that they will be better off for saving. The statement contained nothing about incentives. Instead, we heard a range of specific proposals, some of which we can welcome. Some are old favourites that have been around for a long time. The Secretary of State got a cheer from his Benches for his proposals on TUPE, which were in the Green Paper—not the December 2002 Green Paper, but the December 1998 Green Paper, in which the Government said that they plan to place new regulations before Parliament in 1999. Four years later, he gets a cheer for something that he proposed five years ago.
	Of course, we welcome the proposals for a new regulator. We also welcome the practical proposals on section 67 of the 1995 Act. However, let me ask the Secretary of State about his very significant proposal of a much tougher regime for wind-ups if a company is solvent. I understand the desire that lies behind it—to make life better for those many workers who are understandably angry about the loss of their pensions when the company remains viable—but does he accept that there are two significant dangers? First, there is a danger that companies will stop accruing pension benefits to existing members of their schemes in order to reduce the cost that he is imposing. Can he assure the House that he has considered that risk and is confident that companies will not now close their schemes for existing members as well? There is a danger that the proposal will worsen that risk.
	Secondly, what about the risk of financial engineering? I heard about that when I was in America last week, studying schemes there. It means that companies shed their pension responsibilities to a different legal entity, like a snake shedding its skin, and emerge as a new company without pensions. They are happy for the former legal entity to claim pension insurance, which the Secretary of State announced today. We need to be confident that he has tackled those significant risks in his proposals.
	In fact, the Secretary of State identified the risks in the Green Paper and I invite him to assure hon. Members that he remains confident that he has covered them. The Green Paper stated:
	"We can see arguments for and against"—
	the Secretary of State was in his "for and against" period, which has lasted a long time—
	"increasing the amount that employers are required to put into the pension fund if they choose to wind up the scheme. The Government will be guided by the aim of not increasing the overall burden on employers providing pensions."
	Can he assure hon. Members that he stands by that aim, which he included in the Green Paper only last December?
	The Secretary of State also mentioned pension insurance. Again, I can understand its appeal in principle. However, in practice, there are serious objections. Have the Government considered them? What about the danger of good schemes paying for bad schemes? The Secretary of State gave no indication of the cost of the premiums. What about the danger of that cost being another burden on companies that provide occupational pensions? What about the danger of the insurer going bust? Is the Secretary of State confident that that will not happen and that the Government will not have to bail out the insurer?
	Those objections are not made on the spur of the moment. I have the back catalogue of the Government's consideration of pension issues over the past six years. A document from September 2000, entitled "Security for Occupational Pensions—A consultation document" states that
	"insurance brings with it the clear moral hazard of some employers neglecting their obligations in the knowledge that, in the event of their insolvency, their pension liabilities will still be met."
	That was the Government's view in September 2000. How and why has the Secretary of State changed his mind?
	What about the Myners review? Paul Myners, the Chancellor of the Exchequer's favourite adviser on pensions, who continues to have an advisory role on institutional investment, produced a report in March 2001. It stated on insurance that
	"it would represent an additional cost for providers of defined benefit schemes—at times, possibly a considerable one—and as such would create additional incentives for employers to move away from such schemes. This is not an effective way of meeting the objective of protecting members of defined benefit pension schemes."
	The report continued that
	"it would be much more difficult for pension funds to take a long-term view, as any short-term investment underperformance would be likely to lead to a rise in their premium . . . The review therefore did not recommend insurance as a way forward."
	The Government have regularly commissioned reports on the subject and every one has concluded that the risks of insurance outweigh the benefits. Does the Secretary of State acknowledge that danger?
	The Secretary of State has announced not planning for success, reform of benefits or new incentives to save, but insurance for failure. Someone's house is burning down, yet the Secretary of State is not sending for the fire brigade, but saying that he will consult about the need for better fire insurance in future. That is not good enough given the scale of the crisis in our occupational pensions.

Andrew Smith: The opening remarks of the hon. Member for Havant (Mr. Willetts) somewhat misjudged the mood of the House, because as I was speaking, I could see several Conservative Members nodding assent to my arguments and proposals.
	The hon. Gentleman mentioned debates in the House. On how many Opposition days have the Conservatives chosen to debate pensions? We debated them last Thursday, thanks to the Liberal Democrats. The key matter is the remedy for the insecurity that people are experiencing about their occupational pensions. The hon. Gentleman presented no alternative remedy for that. Again, he dragged out dividend tax credits, yet whenever he is challenged about whether he would reinstate them, he will not make a commitment. What credibility can the public give a party whose members spend all their time attacking a policy but cannot make a pledge to reverse it?
	The hon. Gentleman referred to incentives, but the most important incentive that we can currently offer is to rebuild security and confidence in the system. I am sure that he would throw that at me if we had not presented such proposals. We are, of course, addressing the questions that he asked about the technicalities of wind-up and insurance. As I said in the statement, we want to deal with perverse incentives and moral hazard with regard to risk-related premium and the operation of a cap on the eligible pensionable salary. Of course, we shall consult on the implementation of our new proposals on wind-up and the changed priority order.
	Conservative Members will make a mistake if they do not seize the opportunity to respond to my challenge to build a consensus between employers, trade unions, individuals, the financial services industry and, as far as possible, between parties in the House. Pension policy and protection is for the long term, and the hon. Gentleman makes a big mistake in not welcoming the insurance proposals, which have been strongly urged upon us, by not only trade union representatives and individuals but the financial services industry and many employers.
	The hon. Gentleman asked whether I had considered the overall balance of costs on employers. That is an important question. As I said in the statement, it would be self-defeating if the costs of loading on more protection led people to wind up schemes. We have therefore been careful to produce a balanced package. When the hon. Gentleman has the opportunity to examine the summary regulatory impact assessment, which forms part of the relevant document, he will realise that our best estimate of the overall impact is between zero—a balance of no additional cost—and some £150 million-worth of savings. That comes about because of the extent to which the reduced requirement on the mandatory indexation cap offsets the cost of pension protection. Of course, we must consider distribution issues. However, if we examine the matter in the round, and consider not only the savings from our changes to limited price indexation but those from tax simplification—our replacement of the minimum funding requirement with scheme-specific proposals and other simplification measures—our approach to a pressing problem is balanced and sensible.
	The country will take from the hon. Gentleman's contribution the single point that the Conservatives have no alternative proposal. He goes around conferences pledging to end contracting-out, thereby denying some £11 billion in income to pension funds. I do not believe that that is the best way in which to secure pension protection. Hon. Members and all the interested parties should come together to forge consensus in order to offer pensioners the protection that they deserve.

Steve Webb: I thank the Secretary of State for his statement because today's workers are experiencing a crisis of confidence in their pension funds and some of the measures that he has announced will help to alleviate it. We welcome the proposal to crack down on solvent firms that try to wind up underfunded schemes. That is a welcome change.
	We also welcome the proposal to give workers who have worked for their company for a long time better pension protection if the firm becomes insolvent. It is immoral that someone can put a lifetime's savings in a pension scheme and find that they have been taken away. As the Secretary of State said, there is all-party support for that. It is therefore all the more regrettable that, six months on from the publication of the Green Paper, no concrete proposals have been published. Can the Secretary of State confirm that he has not yet put on the table exact details of how the proposal is going to work? The longer this process is delayed, when insolvent employers wind up a scheme, the more workers will be vulnerable.
	I have a number of concerns about the measures that the Secretary of State has proposed. Can he confirm that he is watering down the protection that future pensioners will get against inflation? Inflation is running at 3.1 per cent. today, which is higher than the 2.5 per cent. protection that company pensions will get in the future. If those circumstances repeat themselves in the future, will every company pensioner in the land see a year-on-year fall in their real living standards? Does this not also mean that the oldest pensioners, after years of falls in their living standards, could yet again be the poor relation?
	By far the most substantial announcement today is the proposed pension protection fund. I absolutely sympathise with the Secretary of State's desire to give people security, but there is a real problem here. Insuring pensions is not like insuring holidays or cars. If a holiday firm goes bankrupt, a few hundred pounds of compensation might be required; if a car crashes, a few thousand might be needed; but if a major company pension fund winds up, we might need a few billion. Is the Secretary of State really saying that the insurance scheme will be allowed to borrow billions of pounds—and, if not, will the Government guarantee to stand behind it? If they will not, this could be a cruel deception. Workers could find that they have lost not only their jobs but their pensions as well, despite having paid for their insurance. We will look positively at proposals for insurance, provided that they are backed by the Government. Without that backing, this could be another cruel con-trick on the work force.

Andrew Smith: I thank the hon. Gentleman for his positive welcome—for the most part—for our proposals. He put it to us last week that he might be applying for the job of Pensions Minister, and if that was his first interview, perhaps he is making some progress—but it is still a case of "Don't call us, we'll call you." He asked about the timing of the measures. As I said in my statement, as far as the proposals on the wind-up of solvent companies are concerned, we are publishing the regulations today and they will, after consultation and due process, take effect from today. He will understand that that is an essential corollary to bringing in the pension protection fund. Firms will have to meet their obligations in full if they wind up their schemes. We shall be laying the regulations relating to the priority orders shortly.
	Yes, of course there will need to be a period between now and when the legislation takes effect in which to set up the pension protection fund. As I said, we will introduce those provisions just as soon as parliamentary time allows. No one is more seized than I am of the importance of getting on with this. To return to a point raised by the hon. Member for Havant (Mr. Willetts) about a pensions crisis, I have to tell the House that I would not be introducing these wide-ranging radical measures if I did not accept the scale of the challenge, and the scale of anxiety that is afflicting pensioners in this country—[Interruption.] We are taking action, whereas the Conservatives have no alternative remedy to offer.
	The hon. Member for Northavon (Mr. Webb) asked about inflation protection. As I explained in my statement, the 5 per cent. mandatory cap was brought in at a time when long-term market expectations of inflation were running at 5 per cent. They are now running at 2.5 per cent. This is therefore a reasonable adjustment. To put it in even more commonsense terms, I believe that the person in the street would readily trade some of their inflation protection for the knowledge that they have security for their pension scheme, which they do not have at the moment. People are worried that other firms will go the way that some already have, and that they will lose their pensions altogether. That is why it is so important that the Government act to introduce these proposals.
	The hon. Gentleman referred to the analogy of holiday protection and motor insurance, but I think that he actually reinforced my argument. If people can count on the fact that firms providing that kind of insurance will be covered if they go bust, surely it is much more important that we have protection for pensions. Yes, the pension protection fund will have to deal with very large sums of money indeed. I am confident, however, having learned from the American experience—rather than replicating it—that we can make the fund work very successfully here on the basis that I have set out.

Frank Field: Will the Secretary of State allow me to congratulate him again on having such a clear idea of what he wants to do, and on coming before the House and setting out his proposals in less than 10 minutes? If only some of his colleagues could learn from him, our proceedings could advance much more quickly. Does he also accept that, of all the statements that he has made, this is probably the one that our constituents will be following most closely? While they will be interested in his ideas on adding to the superstructure of pension provision, many of them will be concerned about the foundations of pensions—particularly those of their own pensions—that they see collapsing.
	May I suggest that, in building a consensus across the House, the Government give some of their own time to discussing the Pensions (Winding-up) Bill, which will come before the House on 20 June? Will the Secretary of State also tell us his ideas for people who will not be covered by anything that he has said today—those of our constituents who have already lost all or part of their pensions? Will he consider putting a levy on the £13 billion in unclaimed assets held by banks and building societies, so that we can deliver justice to that group of workers, as well as planning carefully—as he has outlined today—for any of our other constituents who might find themselves in the same awful pit as those people who have been made to save for more than 40 years and have lost every penny of their savings?

Andrew Smith: I thank my right hon. Friend for his kind opening remarks, and for what I take to be a general welcome for the Government's proposals. As he says, the content of today's statement really means something to our constituents. All hon. Members know that when people see that the pension that they have been paying into—which they assumed would afford them some protection—is not there, they are shocked, horrified and very angry. This touches the lives of our constituents in a very real way, and I am proud that it is this Government who are introducing protection for occupational pension schemes, and protection under the TUPE regulations for transfers within the private sector.
	As for the creation of the pension protection fund, it has been a long-standing aspiration of the trade union movement that something such as that could be put in place. In terms of my right hon. Friend's metaphor about foundations, I hope that he and our constituents will see this as a substantial building block for rebuilding confidence. He raised the agonisingly awful issue of people who have already lost their pension entitlements. Nothing would be more cruel than for me to come to the Dispatch Box and raise false hopes about what might happen. If we are legislating for the future, in terms of establishing a pension protection fund, that would apply in the future and not retrospectively.
	I have taken note of the proposals of my right hon. Friend the Member for Birkenhead (Mr. Field) about orphan assets. The Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Liverpool, Garston (Maria Eagle), pointed out in the debate last week that just because those assets are unclaimed does not mean that they do not belong to anyone. She also said, however, that she and I stand ready to meet people and to engage constructively with any sensible proposals on the subject. The experience of workers at Allied Steel and Wire and others who have suffered so cruelly shows why it is so necessary that we introduce these protection measures and get on with it.

Nigel Waterson: Like many hon. Members, I have constituents who have seen their pensions disappear when a company has gone bust. I therefore welcome, on the face of it, what the Secretary of State has said about changing the priority for creditors in such situations. I want to ask him a specific question, however. After the recent scrapping of priority for the Inland Revenue and Customs and Excise, exactly which interests will be leapfrogged by the interests of pensioners, and will pensioners really have the full protection that they deserve in such circumstances?

Andrew Smith: There are essentially two aspects to the priority order proposals that we are introducing. This is a sort of interim measure that we can bring into effect quite quickly—because it can be done through regulations—pending the establishment of the pension protection fund. There are two kinds of changes to be made. The first is to give more priority to those who have been contributing to a scheme longer, and are therefore more likely to be those closer to retirement. My right hon. Friend the Member for Birkenhead has advocated this proposal in the past. By definition, therefore, there would be a relatively lower priority for those who have not been contributing for so long.
	We are also bringing forward the introduction of measures that were expected to take effect in 2007, to alter the balance and place the protection of active members who are contributing to a scheme over the indexation requirements for pensions in payment.

Derek Wyatt: As my right hon. Friend knows, ASW workers in Sheerness were made redundant last July and their pension funds were put into administration. Although they will be pleased to learn of the protection measures, there will be heavy hearts in Sheerness and Cardiff, for 1,350 have lost their pensions. If my right hon. Friend cannot accept the recommendations of my right hon. Friend the Member for Birkenhead (Mr. Field) in relation to the capping of banks and building societies, will he find another solution? I know of 41 companies in the UK in which the same thing has happened during the last 18 months. Two billion pounds would be needed. That is not much money, and this is a very serious matter. It was a condition of employment for ASW workers that they would have both the jobs and the pensions. They thought that they would receive pensions, but they will not.

Andrew Smith: I understand how my hon. Friend feels, and, more important, I understand how his constituents feel. A number of my own constituents were affected by the Maxwell pensions saga. As I have said, it is because of the seriousness of those people's position that we are introducing the measures that I have described. As I told my right hon. Friend the Member for Birkenhead, I stand ready to engage in meetings and to consider any constructive proposals, but I do not want to raise false hopes.

Paul Goodman: Presumably the Secretary of State agrees that occupational pensions cannot flourish unless the state system is stable. What will the measures that he has announced do to clear up the confusion between what the state second pension seeks to do and what the minimum income guarantee does? A person receiving both the full second state pension and the basic pension will still not be lifted clear of the minimum income guarantee. Does the Secretary of State accept that unless he can solve these serious problems, occupational pensions will not be able to flourish as he wants them to?

Andrew Smith: No, I do not. My statement concerned the specific issue of insecurity affecting occupational pension schemes; but I think that the extension of cover through the state second pension, and what we have done not just in relation to the minimum income guarantee but in introducing the pension credit, will protect those on low incomes and help the important cause of tackling pensioner poverty. I will not take lectures from the Conservatives, who oversaw not only pension mis-selling but the entry of many more pensioners into poverty, and imposed VAT on fuel. They are not in a strong position to lecture us now.

Richard Burden: I welcome much of what my right hon. Friend has announced. It will strike a chord with the employees and deferred pensioners of Kalamazoo in my constituency, whose company has been taken over, split up and finally put into voluntary liquidation. The pension scheme was wound up and today, like many others, the employees stand to lose at least 50 per cent. of their entitlement. I understand what my right hon. Friend said about not raising false hopes, and I applaud his honesty, but I agree with others who have said that we need to consider the issue of retrospection in one way or another. I commend the Bill promoted by my right hon. Friend the Member for Birkenhead (Mr. Field), but if the Secretary of State does not feel able to back it, I nevertheless welcome what he said about talking to people. Let us hope that we achieve some results, because those employees deserve it.

Andrew Smith: I thank my hon. Friend for his welcome for the proposals. As I have said, I stand ready to discuss the issues, although I do not want to raise hopes on any false basis, and I am happy to extend that invitation to my hon. Friend.

Archy Kirkwood: I echo the welcome given by other Members, and I think that the statement will repay careful study. I am also grateful for the Department's positive response to the recent report of the Select Committee on Work and Pensions on this important subject. But the devil is in the detail, and I want to press the Secretary of State on the issue raised by my hon. Friend the Member for Northavon (Mr. Webb) about the insurer of last resort. The Pension Benefit Guaranty Corporation in America has turned a $7 billion surplus to a loss of $3 billion or $4 billion in the space of 12 months. If this scheme is to have any credibility, that issue must be dealt with explicitly at the outset.
	I also want to make a bid for some pre-legislative scrutiny, which the Government appear to have set their face against. Action is important, of course, but does the Secretary of State accept that if the devil is in the detail, the House and its Select Committees must have a chance to look at the small print before announcements are made that are vital to all our constituents?

Andrew Smith: I thank the hon. Gentleman for what he said about our proposals, and commend the work of the Select Committee. Today we are publishing our responses to its recommendations, which are very helpful.
	The hon. Gentleman mentioned the insurer of last resort. There could be an additional element of moral hazard if people felt that the Government stood behind such an institution. As for the financial position of the Pension Benefit Guaranty Corporation in the United States, of course its balance sheet will have shifted given the swings in the stock market, but it is still 90 per cent. fully funded to meet its obligations. At this stage of the economic cycle, that is not a weak position for such an institution to be in.
	The hon. Gentleman asked about pre-legislative scrutiny. We engaged in a lot of consultation, and I detect among the public, as well as in the House, a feeling that we need to get on with introducing legislation—having considered it fully and having scrutinised it in the usual way.

Betty Williams: In view of the severe injustice suffered today by workers at Wardles, Bangor in my constituency, I welcome my right hon. Friend's proposals to extend the TUPE regulations. Does that mean that in future all workers who have made pension contributions will be given a guarantee that their pensions cannot be stopped if their firms are taken over?

Andrew Smith: I thank my hon. Friend for welcoming my statement, and extend my sympathy to her constituents. Following a takeover and a transfer, no pension to which a worker is entitled can be scrapped. At the very least, the employer would have to match up to 6 per cent. of the employee's contributions. In some cases, that could improve the pensions available.

Julie Kirkbride: Like many other Members, I have constituents whose financial security has collapsed in their retirement years—employees of Kalamazoo and UEF, for instance. I agree with the right hon. Member for Birkenhead (Mr. Field) and the hon. Members for Birmingham, Northfield (Richard Burden) and for Sittingbourne and Sheppey (Mr. Wyatt) about the need to find a solution for deferred pensioners who have lost security for their old age.
	What plans has the Secretary of State for the insuring of company pensions, which I think is a good idea? Will the premiums be paid by the employer, or will the Secretary of State allow the employer to pass the contribution on to the employee, who will also be making pension contributions? Given the fact that his Government increased taxes on pensions by £5 billion in their first year of office back in 1997, why should they not share some of the liability that he rather optimistically estimates to amount to about £150 million a year?

Andrew Smith: I am stacking up a lot of meetings today, but I am happy to extend to the hon. Lady the invitation I have already extended to Labour Members to discuss the position of workers in their constituencies. As for the payment of flat-rate risk-related premiums, economists may say that employers always pass on contributions in some way, but we intend the employers to meet the cost. It will, as I have said, be offset by savings made through the reduction of the mandatory cap on price indexation.

Jon Owen Jones: Like my hon. Friend the Member for Sittingbourne and Sheppey (Mr. Wyatt), I have many constituents who were employees of Allied Steel and Wire. While they may gain some comfort from having inspired the statement today, it is cold comfort to know that their experience means that others may not suffer as badly as they have. I plead with the Secretary of State to consider what my right hon. Friend the Member for Birkenhead (Mr. Field) has said and to find some mechanism to help those poor people out.

Andrew Smith: I hear my hon. Friend's pleas, as I have those of other hon. Members. As I have said, I feel for the workers who are affected. Equally, I am sure that my hon. Friend will accept that it would be wrong for me to raise false hopes—but I will engage constructively with sensible suggestions.

Adam Price: As the Government looked into the idea of a pensions insurance system four times and, by the Secretary of State's own admission, in rejecting it on those occasions they got the decision wrong, do they not have a moral responsibility to those at ASW, Blyth and Blyth and other companies? I urge the Secretary of State to look at the experience of the US Pension Benefit Guaranty Corporation, which we are led to believe is the template for his proposal. When it was established in 1974, it brought more than 200 companies retrospectively under its provisions. Surely natural justice dictates that rights promised be rights that are also delivered for the workers who have inspired the Government to change their policy.

Andrew Smith: As I said, the legislation has yet to come forward. The insurance fund is yet to be established. Therefore I cannot give the undertaking that the hon. Gentleman is seeking, but I listen carefully to the points that he makes, and will reflect on them.

Terry Rooney: My right hon. Friend will have cheered millions of people with his announcement, but can he look into the role of the managing trustees and how quickly they bring about the winding-up of insolvency schemes? The money that they take out of schemes is a scandal. Can he consider the way in which European directive 80/987 was put into legislation, because many of today's problems would not exist if the previous Government had met their responsibilities under that directive?

Andrew Smith: I thank my hon. Friend for his remarks. We intend, through our simplification procedures, to speed up the processes, which, as he rightly says, can take too long and consume too many resources. We have detailed proposals to improve dispute resolution procedures. I shall look at the European directive to which he draws my attention.

Peter Viggers: We have all been shocked by the losses that have been incurred by some individuals and it is right that the Government should deal with the issue, but does the Secretary of State agree that all he has done today is attempt to set out a portfolio for sharing the grief more widely and perhaps more fairly, and to introduce some more regulation? He has done nothing to diminish the size of the crisis over which the Government have presided.

Andrew Smith: I do not accept that, because I believe that our proposals on the protection fund, on wind-up, on TUPE and the other simplification measures will increase security. I believe that that will rebuild confidence in the system and offer the protection that people desperately want. As I have told hon. Members, the thorough analysis is aimed at reducing costs where those can be reduced, so that the overall impact on business will be to reduce costs. At worst, there will be a neutral impact.

Kali Mountford: I congratulate my right hon. Friend on his statement, but can he tell the House more about his plans for the pension regulator? If funds are to be properly managed and not to be misappropriated, thereby avoiding insolvencies, do we not need to know more about the range and depth of the regulator's powers? If my right hon. Friend has not yet considered including pension liberation schemes under the purview of the regulator, can he consider doing so, so that people are not ripped off by those scandalous schemes?

Andrew Smith: I thank my hon. Friend for her welcome. We envisage a much more proactive pensions regulator. The existing regulatory body was given a job under the legislation and has done it well, but with the benefit of experience, it is clear that it has had to be rather too much of a process-driven, check-box regulator. It has not been able to get proactively involved in cases of maladministration, fraud and incompetence. We want the regulator to be much more active, as my hon. Friend advocates. I will consider the points that she makes about pension liberation.

Vincent Cable: I warmly welcome the proposals on solvent wind-ups. How would that work where the solvent profitable company is a foreign corporation and the British workers are in a separate legal entity? That has been the case with rogue American companies such Parsons Engineering, EMC Corporation in south-west London, and the former Lufthansa subsidiary GlobeGround, which have effectively stolen a substantial part of their employees' pensions, and also charged them the cost of the wind-up. Employees would have no comeback. In those cases and others, what happens when the trustees cannot act in the interests of the employees because they are effectively stooges of their management?

Andrew Smith: The best laid plans need to be proofed against abuse by those who ingeniously engineer things fraudulently to avoid their responsibilities. We will look—we will have teams of high-powered lawyers to look—at how we can best safeguard against precisely the situation that the hon. Gentleman describes. I make it clear that foreign-owned companies will not be allowed to escape their obligations in that way, and we will put measures in place to ensure that those responsibilities are met.

David Winnick: Is the position not well illustrated by the case, which I raised at Question Time on Monday, of my constituent who at 57 has lost all his pension rights, as have other employees at the company that has closed in Wolverhampton? Is that not a disgraceful position? Do not people such as my constituent face a totally uncertain future? Will my right hon. Friend therefore think again about whether the position of those who have already lost out, too, should be seriously considered, as many Labour Members have pressed him to do? I trust that he will do precisely that.

Andrew Smith: I share the concerns of my hon. Friend and other hon. Members who have raised pressing and distressing constituency cases, and I have to give him the same answer. I will listen to and meet hon. Members and look at sensible and constructive suggestions, but I am not raising false hopes.

David Cameron: Will the review of the wind-up of insolvent companies look at the cases—this comes out of a constituency case—in which companies manage to declare the business insolvent but still profit from the sale of the land by separating the ownership of the two? Does the Secretary of State agree that in such cases the members of the pension fund understandably feel very let down?

Andrew Smith: Yes indeed. We will have to introduce protection against engineering designed to circumvent the intent of our proposals.

Chris Pond: I warmly welcome my right hon. Friend's statement, particularly the extension of TUPE protection to pension rights. He will be aware that many people feel anxious that they may lose their pension entitlements not only when their firm goes under but when it is taken over. May I ask for an assurance that one element of his proposals—the reduction in compulsory indexation—will not be retrospective, and that that will not affect existing pensioners or the rights already built up in pension funds?

Andrew Smith: I thank my hon. Friend for his welcome for the TUPE proposals. I share his enthusiasm for ensuring that protection is extended to people who are presently very worried about their position. The 6 per cent. match is a fair and reasonable way of settling an issue that our constituents have long been worried about. As I said in my statement, the changes on indexation will not be retrospective. They are only for the future, so they will not affect existing pensioners or existing approved rights.

Several hon. Members: rose—

Mr. Speaker: Order. I am conscious that we are going into Opposition time, but there are only a few hon. Members standing. There should be only one question and if questions are brief, I will call all Members who are standing.

Henry Bellingham: I am grateful to the Secretary of State for giving very short answers. He will be aware that many small firms will welcome at least part of this package, because they obviously want more portable, more flexible pensions for their employees. But how can he guarantee that the new pension protection fund will not turn out to be yet one more burden on businesses, and how will he protect very small businesses?

Andrew Smith: The premiums charged for the protection fund will be risk-related and therefore proportionate to the size and potential liabilities of the business. Our employers taskforce, the membership of which is listed in the document published today, is made up of a very experienced and good team of people, including representatives from small business. I have already asked them specifically to look at how we can better facilitate pension provision by small businesses.

Rob Marris: Today's Government response to the Select Committee report refers to the £13 billion that tax incentives are costing the Government in encouraging people to save for pensions. The amount of money saved for a pension and the vehicle through which it is saved are key to security in retirement, yet there is precious little evidence—including from my right hon. Friend's Department—that tax incentives encourage saving, rather than merely redistributing savings. What research is his Department undertaking into tax incentives for retirement saving and how they might be changed?

Andrew Smith: My hon. Friend makes a good point, and an important conclusion of Ron Sandler's report was that the main effect of incentives is to redistribute saving, rather than to add to the total level. We need to make people more aware of the benefits of long-term saving, and of the existing considerable incentive in the system—my hon. Friend mentioned the £13 billion—for saving through a pension. That is why informed choice, our information campaign and our work with the employers taskforce to identify and promote good practice in company pension provision are so important.

David Heath: Scattered across the country, including my constituency, are Maxwell pensioners who suffered first the theft of their pensions and now further reductions in entitlements under the restructured scheme. Do today's proposals contain anything that will help in what is a clearly defined special case in which the Government have directly intervened? If not, can the right hon. Gentleman look into the matter and introduce some proposals?

Andrew Smith: As I said earlier, I have Maxwell pensioners in my area and I have met them in my constituency capacity. As I pointed out, today's proposals look to, and provide protection for, the future; I am not holding out the prospect of retrospective effect. Of course, the Maxwell pensioners' situation arises from an agreement made between the trustees and those who were providing funds, superintended by Lord Cuckney. The matter was dealt with explicitly on a scheme-by-scheme basis.

Neil Turner: I congratulate my right hon. Friend on his statement, the contents of which I welcome, particularly the pension protection fund. He mentioned the problems that we inherited through mis-selling in respect of the state earnings-related pension scheme and private pensions, which hugely undermined public confidence in the pensions industry. Does he agree that the insurance scheme that he referred to will ensure that ordinary people can have full confidence that, when they put money into pension schemes, they will get it back in the form of a pension for the rest of their lives?

Andrew Smith: I thank my hon. Friend for his comments. He is right: when implemented, the proposals will ensure better protection, which is an important reassurance to working people and an important incentive to pension saving.

Ann Cryer: I welcome my right hon. Friend's statement, but I ask his Department regularly to remind women that it is in their interests, regardless of the reliability and generosity of their husband's pension, to build up their own occupational pensions. If widowed, they may have to choose between a lonely old age with a widow's pension, or remarriage and the loss of the widow's pension to which they indirectly contributed through child care.

Andrew Smith: My hon. Friend makes a very important point. Of course, in addition to what we have already done through the extension of the state second pension and the introduction of the pension credit—measures that themselves greatly advantage women—today's proposals offer further help. In summary, proposals for those who have been in jobs for a short time will disproportionately benefit women, and the simplification of the arrangements for pension splitting on divorce will enable more women to benefit, in pension terms, from their divorce settlement. Moreover, having listened to consultation, we have decided to retain survivors benefits—a decision that is of enormous consequence for women.

Anne Begg: I add my voice to those who have welcomed today's statement. The pension protection fund obviously applies to funds that got into trouble because the employer became insolvent, but will it also apply to funds that got into trouble because they were badly run and therefore could not meet their obligations?

Andrew Smith: Where questions of fraud are involved, our proposals will strengthen protection from 90 per cent. to 100 per cent. On cases that do not involve fraud, I shall write to my hon. Friend.

Julie Morgan: I welcome my right hon. Friend's proposals, but I express my deep disappointment that they do not appear to cover the steel workers from Allied Steel and Wire in Cardiff and Sheerness, many of whom are my constituents. Will he look at a possible way of helping those people, who invested their life savings in pensions and are now likely to get nothing? Is there any possibility that they might benefit from this legislation if, by the time that it is introduced, their pension fund has not been wound up?

Andrew Smith: I understand how my hon. Friend and her constituents feel about this issue but as I have said, nothing could be crueller than for me to say that this legislation will offer them help when I do not envisage at this stage that it will apply in the way that she advocates. Every hon. Member knows of the difficulties in introducing such proposals and then applying them retrospectively—not the least of which is the very difficult question of where we draw the line. I am afraid that we will always find tragic cases that fall the wrong side of any line that we draw.

Andrew Miller: The Pensions Act 1995 failed to protect my constituents, who suffered through the scam undertaken by H. H. Robertson. Ministers promised that they would learn lessons from that, and everyone will undoubtedly welcome the fact that it is clear from today's statement that Ministers have indeed done so. However, I want to pursue a point made by my right hon. Friend the Member for Birkenhead (Mr. Field), who must have had H. H. Robertson in mind. If my right hon. Friend the Secretary of State is unable to levy orphan funds, he might be able to borrow from them. Doing so would be cheaper than the cost of the benefits that the state has to pay people as a result of fund failure.

Andrew Smith: I hear what my hon. Friend says, and I said that I would engage with sensible suggestions. The prospect of finding money at no cost without depriving people of their rights can be seductive, but such a prospect does not always stand scrutiny and further investigation. We have to be careful in this area.

Harry Barnes: The statement contains some welcome proposals, but they arise from a wave of recent and current problems. For people whose funds have been hit, are not the only avenues open to them an appeal to the Office of the Pensions Advisory Service or the pensions ombudsman, which have very limited powers to assist them? Members such as my right hon. Friend the Member for Birkenhead (Mr. Field) have suggested an additional avenue for tackling the problem of firms that have gone into administration, such as Coalite in Bolsover. Should not the pension fund itself be a first-line creditor, so that its funds are protected? My hon. Friend the Member for Bolsover (Mr. Skinner) would undoubtedly have been present for this statement if he had been around and about, and I assure the Secretary of State that he has been pursuing this issue with vigour through other means.

Andrew Smith: I thank my hon. Friend for welcoming the statement. His comments underline the importance of taking this opportunity to rebuild the pensions partnership, so that all parties—employees, the financial services industry and, yes, employers as well—meet their obligations. The proposals announced today include measures to strengthen as well as clarify the role of the pensions ombudsman, and plans to introduce a newly proactive regulator who could investigate the sort of problems that my hon. Friend describes.

Point of Order

Eric Forth: On a point of order, Mr. Speaker. You are the custodian of the rights of the Opposition parties as well as those of Back Benchers, and you will be aware that, on page 271, Erskine May says:
	"Standing Order No 14 provides that on 20 days in each session, proceedings on business chosen by the opposition parties shall have precedence over Government business."
	That raises a long-standing issue in the House: protection—so far as it is possible these days—for Opposition parties. You will also know that it is a convention beyond that Standing Order that Governments do not bring forward Government or ministerial statements on Opposition days. However, on at least two other recent occasions as well as today, the Government have done precisely that.
	Mr. Speaker, you have generously and properly allotted considerable time to today's important statement to allow Members to express their concerns and those of their constituents. However, the Opposition's time has now been reduced as a result of the Government statement, which, by any reckoning, could have been given on any number of days before or after today. What can be done to protect the Opposition from that sort of casual action, which eats further into the time available to hold the Government to account? I hope that you will agree that that cannot be allowed to go on.

Mr. Speaker: I have some sympathy with the right hon. Gentleman, but the matter should be dealt with through the usual channels—[Interruption.] The right hon. Gentleman was kind enough to remind me of Erskine May, and I have consulted page 307, which states:
	"Prior notice to the Speaker is necessary, but neither his permission nor the leave of the House is required"
	to make a Government statement. The usual channels will take note that I would prefer it if, on Opposition Supply days, we do not have Government statements. That is the best comfort that I can provide to the right hon. Gentleman.

BILL PRESENTED

Children's Commissioner for England

Mr. Paul Burstow presented a Bill to establish a Children's Commissioner for England; to make provision for the Commissioner's duties including monitoring complaints procedures for children, overseeing arrangements for children's advocacy, monitoring legislation to ensure that the needs of children are taken into account, overseeing child death reviews and carrying out inquiries into major child abuse cases and child deaths; and to make provision to ensure that the work of the Commissioner is compatible with the UN Convention on the Rights of the Child: And the same was read the First time; and ordered to be read a Second time on Friday 11 July, and to be printed. [Bill 121].

Village Halls (Grants)

David Cameron: I beg to move,
	That leave be given to bring in a Bill to make provision in relation to grants from the Community Fund for village halls.
	England's 8,900 village halls play a vital role in community life. In villages such as those in my west Oxfordshire constituency, they are the focus of community life. They provide the venue for the parish council meeting, the pre-school playgroup, the amateur dramatic group, the youth clubs for the young and the lunch clubs for the old. They host public meetings, surgeries, fund-raising events, dance classes, computer training and much else besides. If we want a neighbourly society, where people can do things together for the common good, village halls must play an essential part. If anything, village halls are becoming more rather than less important. As a parish councillor in Hailey in my constituency wrote to me
	"The loss of village post offices and village shops more generally makes it more important that there is a focal point in the village for the community."
	I should like to explain what my Bill will do, the worrying situation that it is designed to overcome, and the advantages that it will have. Is it framed in such a way that the Government could pick it up and pass it through this place tomorrow? No. But does it contain the germ of an idea that they and my own party should take on and enact? Yes, absolutely.
	The Bill amounts to a very simple proposal. If a village hall project for either refurbishment or rebuilding can raise 25 per cent. of the funds required, and if it can get the district or county council to match it with a further 25 per cent., the Community Fund would, under my Bill, have to provide the rest. I am not immovable about the percentages and I recognise that some villages would struggle to raise 25 per cent. I also understand, as a resident from Fifield reminded me, the importance of the small refurbishing projects as well as the larger rebuilding ones. What I am certain of is the need for an automatic mechanism, at least for a part of the project's total. There would also have to be a maximum level of funding and I would seek to consult on the level at which it should be set.
	That is a powerful concept. At a stroke, village halls would have a simple, automatic way of accessing funds. It would simplify the endless form-filling necessary to win a lottery grant and focus the lottery on what most of our constituents believe it was set up for—the social fabric of our country. Village halls are perhaps the most visible example of that. Dare I say it, it would make the lottery popular throughout the country as people would see a more direct link between buying a ticket and seeing the beneficial results.
	The lottery has achieved great things and I believe that the greatest have been the smallest—not the dome, but the parks, the halls, the cricket pavilions, the small public spaces that have been vastly improved. I believe that that was the essential part of the vision that lay behind the decision, taken by the Conservative Government, to set up a national lottery in the first place—and it was supposed to be nationwide. I am grateful for the help of the Oxfordshire rural community council, which does such excellent work, and of its national body—Action with Communities in Rural England.
	There is a backlog of village hall projects. In Oxfordshire, 50 are being planned, with total costs of more than £6 million, but the lottery is moving away from funding them. Between 1999 and 2002, our county had 20 successful applications—an average of six a year. In the last 12 months, we have had just two. There have been at least 10 unsuccessful applications since 1999 and many others have been discouraged. The Community Fund is now quite explicit about that. Funds are now targeted on certain geographical areas and groups. Areas such as mine are losing out and people feel that it is not fair. By all means, favour the inner cities and the most deprived overall, but the lottery must be available to all.
	According to the Countryside Alliance, funding for village halls is being cut by £17 million. As ACRE put it,
	"Major capital projects such as rebuilding, refurbishing and the provision of new community halls are most likely to be unable to access sufficient funding."
	There is also a squeeze on the funding of village halls from other angles. Lottery tickets sales are down and other sources of funding are drying up: the landfill tax credit money may be replaced.
	The Countryside Agency has a large cost overrun for its mapping exercise for the right to roam. What a waste of money that has been—and costs are increasing all the time. Village halls have to meet all the required disability legislation. I know how much those things matter: disabled access and disabled loos, for example, are essential if disabled people are to take part in all the activities that I have spoken about. However, many village halls were built long ago and the costs of refurbishing and meeting all those requirements are substantial. Salford village hall in west Oxfordshire is planning to spend £140,000, most of it to meet disability legislation.
	Let me expand on some of the advantages of an automatic funding scheme. First is the simplicity. One fundraiser from Stanton Harcourt in Oxfordshire, described dealing with the lottery bodies as "disheartening". Another told me that it could take 20 working days to fill in an application form. As a constituent in Northmoor wrote to me, saying:
	"A clear straight forward funding path . . . would be a tremendous boon."
	The second advantage would be that it would focus the lottery on such projects. A fundraiser from Fulbrook wrote to me, saying:
	"All our hard earned funds will be to no avail without a change in lottery allocation policy. We do not know where else to turn."
	Finally, there is the popularity of the lottery. We all know from our postbags that people feel that the lottery has lost its way. I make no comment about the grants to asylum seeker groups, Venezuelan farmers or anyone else, but why do we not renew the concept that the lottery is about improving the social fabric of our communities—and where better to start in rural areas than village halls? I see the Foreign Secretary in his place, a resident of Minster Lovell in my constituency, and I am sure that he will support me.
	I should not paint an entirely depressing picture. There are some fantastic projects going ahead. In Tackley, the community has come up with a very enterprising all-in-one concept of building a new hall that will include a village hall, a shop, information technology facilities, sports facilities and much else. It received a grant of £50,000 from the Department for Environment, Food and Rural Affairs, alongside grants from the district council and others. In North Leigh, where the memorial hall costs huge amounts of money in repairs and maintenance, planning consent has been obtained for an innovative replacement for use by residents, the school and others. The parish and the district council have committed £200,000 between them, but without lottery funding the benefits will be lost.
	In summing up, I have to admit that one or two voices in response to my local consultation that took a slightly different view. Some remained sceptical about the lottery itself. One, a weaver from the Filkins, who provided the late Sir Hardy Amies with some of his finest cloth, wrote to me as follows,
	"If there is to be a lottery, the funds should be spent entirely on public fripperies: statues, follies and parks . . . either very beautiful things or very useless ones, but preferably both. This would discourage people from buying tickets and fill the country with eccentric wonder paid for by the remaining diehard gamblers."
	That proves that in west Oxfordshire we have wonderful eccentrics, as well as beautiful villages, churches and halls. I commend my Bill to the House.
	Question put and agreed to.
	Bill ordered to be brought in by Mr. David Cameron, Mr. Nicholas Soames, Mr. Hugo Swire, Gregory Barker, Hugh Robertson, Tony Baldry, Mr. Adrian Flook, Mr. George Osborne, Mr. Paul Goodman, Mr. Andrew Turner and Mr. Andrew Lansley.

Village Halls (Grants)

Mr. David Cameron accordingly presented a Bill to make provision in relation to grants from the Community Fund for village hall: And the same was read the First time; and ordered to be read a Second time on Friday 11 July, and to be printed [Bill 122]. Opposition Day

[8th Allotted Day]

European Treaty Referendum

Madam Deputy Speaker: I must inform the House that Mr. Speaker has selected the amendment in the name of the Prime Minister.

Michael Ancram: I beg to move,
	That this House believes that any Treaty providing a constitution for the European Union should only be ratified by Parliament once it has received the consent of the British people, democratically given in a referendum.
	This is a straightforward and democratic motion that I hope will win widespread support across the House. It is also a timely motion, as it is being debated on the eve of the national referendum on a referendum that is being conducted by the Daily Mail. [Interruption.] I congratulate the Daily Mail on its initiative, and it is not alone. A referendum is also backed by The Sun, The Daily Telegraph, the Yorkshire Post, The Birmingham Post, The Scotsman and many other newspapers, but, most importantly—as shown in opinion poll after opinion poll—it is massively backed by the British people.

Frank Field: Let us quickly get back to the mountain heights, rather than the lower hills, of this debate. Does the right hon. Gentleman accept that as most Labour voters are in favour of a referendum, and as there is a slight division between some of our leadership and the rank and file, the best course of action today would be for us to have a good debate and to call for many more debates, but for the right hon. Gentleman not to push the motion to a Division? If we divided on the issue, hon. Members would have to take a position in the early stages of this debate, but I am sure that once their constituents had got hold of them they would change their minds.

Michael Ancram: I listen with interest to the right hon. Gentleman's comments. The calling of a referendum has been Conservative policy for some six months—[Laughter.] The Foreign Secretary will recall that I announced that call in the House and that he asked me whether it was party policy. It has been our policy for six months, and it remains so. In that light, we will have to consider the comments of the right hon. Member for Birkenhead (Mr. Field). We welcome his Bill, and we hope that the Government will give it a fair wind, so that the House may play a part in ensuring that people have a right to decide on this important issue in due course. We will try to assist him in any way that we can.

Graham Allen: I apologise for missing the right hon. Gentleman's opening remarks. Does he realise that he makes pursuit of the Bill promoted by my right hon. Friend the Member for Birkenhead (Mr. Field), and sponsored by me and many others, more difficult by turning it into a party political issue, when it can be portrayed—as it was at Prime Minister's Question Time by my right hon. Friend the Prime Minister—as a blocking attempt? Does the right hon. Gentleman accept that a wiser course would be the one proposed by my right hon. Friend the Member for Birkenhead? We could have the debate, which would allow hon. Members and—above all—the Government to think about the issue, so that a policy that is six months old is not made worse by a Government policy that is three months old.

Michael Ancram: The hon. Gentleman was kind enough to apologise for not being here for my opening remarks. Had he been, he would have realised that I have not mentioned the Government so far, and I agree with him that the matter should—as I said at the beginning of my remarks—win widespread support across the House. The terms of the motion are simple and straightforward. They are as politically neutral as possible, and I hope that the hon. Gentleman will reflect on his position when we reach the end of the debate.
	I hope that as many people as possible will register their opinion tomorrow, if only to show the Government that the British electorate will not readily be sidelined on major issues that involve the transfer of powers from this country.

Several hon. Members: rose—

Michael Ancram: I shall not give way at the moment, because this debate has been severely curtailed by the Government statement. I must make progress, because several of my hon. Friends wish to take part in the debate. At a time when referendums have become an instrument of our political system, and when popular involvement in decisions has become part of our national culture, it would be wrong for an important decision affecting the future of our country to be taken without reference to the people. We should provide them with the opportunity to choose,
	"And then the people will decide".
	Those are not my words, but those of the Secretary of State for Wales on the "Today" programme on 27 May when he thought, perhaps unguidedly—until he was required later to unthink—that next year's elections could be used as some sort of surrogate referendum.
	The words of the Secretary of State for Wales are important, because they reflect the purpose of this motion, which is to enfranchise the people, not through the European elections but through a referendum. I hope that the right hon. Gentleman, who—I am sad to see—is not in his place today, will have the intellectual integrity to support us in the Lobby later.
	What of the Liberal Democrats? I was pleased to hear the right hon. and learned Member for North-East Fife (Mr. Campbell) say that
	"If Convention proposals have constitutional implications, there should be a referendum."—[Official Report, 21 May 2003; Vol. 405, c. 1053.]
	That sentiment is broadly reflected in the amendment that they have tabled today. Our motion refers to a
	"Treaty providing a constitution for the European Union".
	It is impossible to see how a constitutional treaty providing a constitution can, by definition, be said not to have constitutional implications. I cannot see how even the Liberal Democrats can, with integrity, avoid supporting our motion today.
	We will be told that when we were in office we did not propose referendums on European matters of constitutional significance—that attack has been made on previous occasions—but was not it John Major who promised a referendum on the single currency? After six years of commitment from this Government, we are still waiting for that referendum.

David Wright: rose—

Keith Vaz: rose—

Michael Ancram: I shall give way to the hon. Member for Leicester, East (Keith Vaz), because he was Minister for Europe.

Keith Vaz: Why did the right hon. Gentleman not support a referendum on the Maastricht treaty?

Michael Ancram: I shall come to that point in my own time. I hope that the hon. Gentleman has lifted his eyes higher than The Beano since he last intervened in the debate.

Patrick McLoughlin: There was a chance for people to exercise a view on Maastricht, because it was negotiated before a general election, in which it formed part of the Conservative party's manifesto, and implemented after it.

Michael Ancram: I am grateful to my hon. Friend for making that point. I will address the issue in due course, because it is important, but I am reminded that during the debates on Maastricht the Labour party—including the shadow Cabinet—was not exactly united in its view on the need for a referendum.
	We are told that we will still get a referendum on the euro, but we will have to wait and see. All that we are getting at the moment is the Tony and Gordon roadshow—the Government's answer to our ill-fated Eurovision entry Jemini, being ill matched and out of tune. After six years of being told that the single currency was simply an economic decision, with no constitutional significance, suddenly we are told that it has achieved constitutional significance again.
	The Prime Minister said in Warsaw on 30 May that
	"if we recommend entry to the euro, it would be a step of such economic and constitutional significance that a referendum would be sensible, and right, which is why we have promised one."
	The Prime Minister used the phrase "constitutional significance", but what about the Convention? At Question Time today, the Prime Minister said again that he did not believe that the Convention was constitutionally significant, but I ask the question again: if a constitutional treaty providing a constitution for the EU is not of constitutional significance, what on earth is? Surely it would be as sensible and right to have a referendum on the constitution as on the euro?

Angela Browning: On the Government's judgment about whether joining the euro has constitutional implications, I and many other Opposition Members have questioned Ministers over a long period of time about their evaluation and judgment when they determined that there was no constitutional case to answer and that the argument for joining the euro was purely economic. In fact, we demanded that they put the relevant papers in the Library of the House. If the Prime Minister is now saying that there is a constitutional case to answer, should he not place the relevant papers in the Library immediately?

Michael Ancram: My hon. Friend makes a very good point. The Government have changed their position on the matter. We were told for a long time that the issue was solely a matter of economics. However, in order to justify a referendum on the euro and not on the forthcoming treaty, we are suddenly told that the euro has constitutional significance. It would be helpful if the papers relating to that change of view were placed in the Library of the House.

Tom Harris: rose—

Alan Howarth: rose—

Michael Ancram: I want to make progress, as the debate was severely delayed by the Government statement that preceded it. Many Opposition Members want to take part in this debate.
	I am sure that we will also hear the usual attacks for not backing referendums in the past. The answer is straightforward. Ten or 12 years ago, we did not have referendums. Even Labour Members argued in many debates—and I can give the House examples, if necessary—against referendums. However, nowadays we do have referendums, and that is because this Government have made them readily available as a political and constitutional device for allowing people to decide. There has even been legislation on the systems of referendums.
	The Government have used referendums with gusto. There have been 47 referendums since 1997, on matters ranging from the Belfast agreement and devolution for Scotland and Wales to the London Mayor and Assembly and the much-canvassed mayor of Hartlepool; many more are promised on regional assemblies. This Government love referendums, as they have shown over and over again—but not on this matter, the most important and far-reaching issue of the lot. It is their instant ruling-out of one on the European constitution that stands out.
	Why this matter? What are the Government afraid of? If the people's consent to set up a mayor of Hartlepool is so important, why is it to be denied for the setting-up of a European president of a European political Union? The answer, we were told by the Prime Minister again in Warsaw, is that neither the Convention nor the IGC represents
	"a fundamental change to the British Constitution and to our system of parliamentary democracy".
	How does the Prime Minister know what an IGC that has not yet begun is going to represent? On that basis, how can he rule out a referendum now?

Angus Robertson: Will the right hon. Gentleman give way?

Michael Ancram: In a moment.
	Today's amendment changes the criteria. Out goes the phrase
	"a fundamental change to the British Constitution",
	and in comes the phrase
	"do not involve a fundamental change in the relationship between the EU and its Member States".
	Those are two very different sets of criteria. In a sense, it is perhaps all about words, but what matters is the reality.

Angus Robertson: The right hon. Gentleman is making eminently logical points about a constitution being of constitutional significance, and that therefore citizens should be able to vote on the matter. The Government entered into the Convention process for two reasons, one of which was to reconnect with citizens of the EU. Surely the best way to reconnect with citizens is to give them a choice—in this case, whether they are for or against a constitution?

Michael Ancram: I fully agree with the hon. Gentleman. In my later remarks, I shall produce some interesting quotations to underline that point.
	I was saying that it is the reality that matters, not the words. We are at the moment part of an albeit imperfect Europe of nations. I believe that the European Union is in need of reform, but if the Convention proposals as they stand were ratified in a treaty we would be part of something fundamentally different.
	I do not mind whether we call it a superstate, a federal power or—the Prime Minister's preferred option—a superpower. I do not care whether we call it a politically united Europe or even Romano Prodi's "advanced supranational democracy". All I know is that it will not be what we have now. It will be a step change away from that. I do not understand how can the Government can claim that that does not involve a fundamental change of the relationship between the EU and its member states, because it changes that relationship: member states would go from being partners to being subservient components.
	If we look at the overall result of the Convention's proposals, we begin to see what is happening. The proposals will lead to a legal personality, a constitution, a president and a foreign secretary. It will involve fundamental rights, including the right to strike, legally enforceable at a European level. There will be a common foreign and security policy, and a European prosecutor. European law will have explicit primacy, and it will have an increasing role in criminal law, especially in procedure. There will be shared competence over immigration and asylum, with no veto, and Europe's powers will be expanded into vast areas, from transport to energy. There could even be—who knows?—a common currency.
	Each of those elements diminishes our existing national sovereignty in one way or another. Together, they build a new and distinct political entity that has many of the attributes of a country. That is the truth, however hard the Government seek to disguise it. To call this a tidying-up exercise is laughable, and simply not true.
	One of the Convention's leading members, the former Italian Prime Minister Lamberto Dini, said in The Sunday Telegraph of 1 June:
	"The Constitution is not just an intellectual exercise. It will quickly change people's lives . . . and eventually will become an institution and organisation in its own right."
	That may not suit the Government's agenda, but Lamberto Dini is on the Convention, and that is what he believes will happen. That is the reality.

Alan Howarth: That is the point of view of that politician, but the right hon. Gentleman anticipates the result of the IGC. Does he not accept that Europe already has a constitution in terms of its working arrangements? If our Government handle our national interests in the IGC as I expect them to, the document that will emerge will not involve a surrender of crucial national powers to a federal structure in Europe, or whatever the right hon. Gentleman cares to call it. Would it not be wiser for us all not to be dogmatic at this stage? If a question arises of a fundamental transfer of power, there should be a referendum. However, should we not refrain from taking dogmatic positions on the point until we are presented with that question?

Michael Ancram: I was trying to suggest to the House that we look at the totality of what is being done. I used to practise in the courts, and one could take little bits of evidence and say that none of them amounted to much on its own. What matters is the eventual result of putting them all together. I am suggesting to the House that what is being created, whether one wants it or not, is very different from what we have now. If that is the case, it is of constitutional significance, and it should be the subject of a referendum.

Teddy Taylor: Has my right hon. Friend seen the proposals for a European foreign minister? Will he try to tell us what that is all about? What would that minister do, and to whom would he be answerable?

Michael Ancram: Perhaps I missed the foreign minister out, but I meant to include him in the list of components that will be available at the end of the process. I believe that those components will change the nature of the EU. My hon. Friend makes the point that an EU foreign secretary and a common foreign and security policy would mean that the circumstances of the EU would be very different from what they are at the moment. We must consider that point as we determine whether a referendum is necessary or not.
	The Government know that the proposals are far reaching. The Treasury's own single currency assessments published on Monday state:
	"Many of the issues being considered by the European Convention could have far reaching consequences for the future performance of EU economies whether they are part of the euro area or not."
	That means us, and it does not sound to me like tidying up. It sounds much more like the Prime Minister's criteria of economic significance as well as constitutional significance, about which he spoke in Warsaw, where he said that they make a referendum sensible and right. His words also apply to what we see coming from the Convention.
	My party opposes the constitution, but that is not the point of the motion. The point is to give the British people the right to decide whom they believe and what choice they want to make about how this country goes forward in Europe. That is why we are pressing for a referendum. Parliament is sovereign, but, in my view, that sovereignty is granted to it in trust by the people. Parliament should not be able to alienate sovereignty permanently and irreversibly without the express consent, democratically given, of the electorate. In the absence of a general election, such authority can be given to Parliament only by a referendum.
	Authority has not been given, nor have the Government sought it. There was no mention of a European constitution in their manifesto. That is another reason why a referendum is necessary. That is not just the view of the Conservative party or our country: the hon. Member for Moray (Angus Robertson) reminded us of the origins of the Convention, and I shall quote what Valéry Giscard d'Estaing said on 28 February 2002 when he launched it:
	"Treaties are made by states and agreed by Parliaments, but constitutions are created by citizens and adopted by them in referendums."
	That was his view then; I believe it remains his view today. The Danish Prime Minister, Mr. Rasmussen, was reported as saying on 28 May:
	"What is at stake is so new and so big that it is right to hold a referendum".
	From all corners of the debate in Europe, people are telling us that the constitution is a significant move forward and that it is a subject fitting for a referendum. The case for a referendum is compelling.
	The motion refers carefully and deliberately to
	"a treaty providing a constitution for the European Union".
	That makes it even more difficult for me to understand how, without their knowing the eventual shape and contents of the treaty, the Government are able instantly to rule out a referendum. If they do not know what they will be looking at in the long term, how can they say that there will be no referendum? Why are the Government so frightened? Are they frightened that their smokescreen will be blown away, and is that why they dare not let the British people decide? Other countries will let their peoples decide. Denmark and Ireland will let the people decide. France, Portugal, Sweden, Finland and Austria may, in various ways, let their people decide. The Netherlands has just decided on a non-binding referendum. Only Britain, Germany, Belgium, Luxembourg and Greece refuse point blank to let the people decide.

Tom Harris: Will the right hon. Gentleman give way?

Michael Ancram: I have taken enough time.
	The Government's position insults the British people. They continue to play what I call the "big lie" card, saying that the debate on Europe is about going right in or coming out of Europe, and that they want in and we want out. That is dishonest spin of the worst sort—the kind of spin that has already brought them into disrepute, a lesson from which I hope they learn. The real Europe debate, which the Government are so keen to avoid, is the debate about the sort of Europe that we want to be in. Is it a Europe of sovereign nations that we seek, or is it the European superpower that the Prime Minister proclaimed in Poland in October 2000 and in Cardiff in November 2002? That is the real choice.
	This motion is about trusting the people. It is a democratic motion. It exposes the arrogance of a Government who will not let the people have their say. What is the betting that the Leader of the House will shortly tell a newspaper that there are rogue elements in the electorate, let alone in the House, who are seeking to undermine the Government, and that that is why we cannot have a referendum? Only six years ago, the Government asked us to trust them. What we are saying is: "Trust the people." Why do they continue to say no?
	We will trust the people. We will not take no for an answer. We will let the people decide. I call on the House to support the motion.

Jack Straw: I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
	"notes that previous governments rejected referendums on previous constitutional treaties such as the Single European Act and Maastricht, both of which involved greater change than the draft Treaty proposed by the Convention on the Future of Europe; believes that since the proposals of the Convention do not involve any fundamental change in the relationship between the EU and its Member States, there is no case for a referendum; and notes that any proposals from the Convention are a matter for unanimous agreement by an Inter-Governmental Conference, and then endorsement by the Parliament of the United Kingdom."
	The heart of the case made by the right hon. Member for Devizes (Mr. Ancram) is that changes proposed by the Convention are of such a scale that a referendum to endorse them is necessary. We take a different view. What the Convention is proposing—and what the intergovernmental conference is likely ultimately to agree—will not alter the fundamental constitutional balance between the European Union's institutions and the member nation states.
	An important prior point should be made. The Convention can only make recommendations; it cannot decide. The draft constitutional treaty, which the Convention will submit next week to the Heads of Government at the European Council in Thessaloniki, has no legal status whatsoever. Like any draft, it is open to improvement and amendment. Like every other draft treaty in the EU's history, it will be subject to intense negotiations, in this case at the intergovernmental conference later this year, at which all decisions will be taken exclusively by the nation states on the basis of unanimity.

John Maples: The main part of the Foreign Secretary's argument that there should not be a referendum is that the constitution as drafted by the Convention does not alter the fundamental relationship between the Union and the member states. I take it from that that if he were to conclude that it did alter that relationship, he would find it difficult to resist a referendum, and I suggest that the incorporation of the charter of fundamental rights, which makes basic individual political rights justiciable by the European Court of Justice, and thereby enforceable on member states, does fundamentally alter that relationship.

Jack Straw: I will come to the detailed issue of the charter. I simply say that the horizontal provisions in article II-51 provide a significant number of safeguards against the hon. Gentleman's anxieties.

John Redwood: Given that both major parties rightly offered a referendum on the most crucial part of the Maastricht treaty—the common currency—why will the Government not offer a similar referendum on the common foreign and defence policy and the common immigration and justice policy in the draft treaty? Does he understand that I-39 of the draft gives the EU a veto over our foreign policy, which it does not enjoy today?

Jack Straw: The reason is exactly that given by the right hon. Gentleman in April 1993 for voting against a referendum on Maastricht, which, on any basis, significantly changed the relationship between the European Union and its member states to a far more fundamental degree than is ever likely to be proposed in the Convention.

William Cash: The Foreign Secretary is speaking about changes of a fundamental nature. Does he agree that if and when Parliament were to implement the proposed constitution, that constitution would effectively acquire a greater constitutional superiority over this Parliament?

Jack Straw: No. I shall come to the label to be accorded to the treaties: we propose, quite sensibly, to call them a constitution; the Tory party, so far as I know, has a constitution, and that does not, thank God, make it a nation state. The shadow Attorney-General is raising the spectre, which has haunted him for years, of EU laws being able to override the laws made in the House of Commons. That has been a fundamental part of our relationship with the European Union, and in our constitution, since 1972, as shown by section 2(2) of the European Communities Act 1972. There is nothing in the proposals from the Convention that alters or extends that fundamental fact.

Graham Allen: Would my right hon. Friend accept that one way of allaying justifiable fears on both sides of the House and, indeed, in the country would be for Parliament to examine the text of the document—whether it is a constitution or a convention—prior to a final decision at the intergovernmental conference. In that way, as well as being executive-led, the constitution would have received serious parliamentary input, provided, of course, that we allow the Executive to negotiate properly at the IGC.

Jack Straw: I completely agree with my hon. Friend. There should be the maximum parliamentary involvement and examination that he seeks in the final text for the Convention. I also pay tribute to the Government representatives and especially to the parliamentary representatives, the right hon. Member for Wells (Mr. Heathcoat-Amory), my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) and to the right hon. Lord Maclennan for the way in which they have represented in the Convention their parties and the national interest. Week by week and month by month, they have tried to ensure that Parliament is engaged, but I entirely agree with my hon. Friend the Member for Nottingham, North (Mr. Allen) that there should be extensive discussion, engagement and examination of the Convention's proposals, both on the Floor and upstairs in committees, and we shall be making proposals for that.

Michael Spicer: Will the Foreign Secretary veto any proposals that come before the IGC in the autumn for a single or common foreign policy?

Jack Straw: There is an issue about whether qualified majority voting should be extended, which we are resisting. The hon. Gentleman has a terribly short memory. Common foreign and security policy is not being put into EU treaties by the Convention; it has been in those treaties since Maastricht, like the requirements for co-operation and so on. We are talking about the collapse of the pillars, but that is a distinction without a difference, as we are excluding what normally goes with pillar 1, namely the justiciability of decisions in the European Court of Justice.

Angus Robertson: Will the right hon. Gentleman give way?

Jack Straw: No. This is only a short debate and, if there is time, I shall give way later on.
	Every decision that we take over the next month, in the run-up to the IGC, and in the IGC, will be based on the national interest. What matters is that we secure the right text. Parliament will be the judge of that. Once a draft has been agreed, the House will have the final say. That was the approach adopted by the Governments of the day in 1986 on the Single European Act and again in 1993 on the Maastricht treaty.

Malcolm Savidge: Will my right hon. Friend give way?

Jack Straw: I will give way later.
	Maastricht is important, because what happened then tells us so much about today's Tory party and its attitudes towards Europe. Just 10 years ago, the Conservative party was led by someone who at least recognised the need for Britain to maintain a constructive relationship with Europe. He was supported in that—then—by the right hon. Member for Devizes whose speech during the passage of the European Communities (Amendment) Bill—the Maastricht Bill—sang to the tune of engagement with Europe. The right hon. Gentleman said:
	"I fear that those who say that we should turn our backs on Maastricht are taking a tremendous risk—the black risk of a centralised Europe, the risk that Europe will go on without us if necessary, and even if we are part of it, our colleagues will say, 'You've had your chance. In future you can take it or leave it.'"—[Official Report, 4 November 1992; Vol. 213, c. 343.]
	The real battle then was not between the Conservative Government and the Labour Opposition; it was a fight within the Tory party between those such as the right hon. Gentleman who—then—wished to see the United Kingdom play a constructive role in the European Union and those who, in truth, wished to see Britain's progressive detachment from Europe. Of course, in those days, the right hon. Gentleman and the sane tendency were in the majority. Not any more: for what 10 years ago was a marginal group of zealots, determined to undermine the UK's position in Europe and to wreck John Major's Government, now constitutes the leadership of today's Tory party. What was once a marginal militant tendency is in control, and the prejudices, myths and fantasies about Europe are confirmed party policy.
	In an excellent speech in the House on 21 May, only two weeks ago, the hon. Member for Esher and Walton (Mr. Taylor) described the then Maastricht wreckers as "nutters"—I quote directly from Hansard. Well, the nutters have well and truly taken over the asylum.

Michael Ancram: I am very grateful to the Foreign Secretary for giving way. I have two brief questions. First, did he stand in 1983 on a manifesto that committed him to withdrawal from Europe, and what has happened to his view, which I am sure that he held sincerely at the time?
	Secondly, in relation to his comments about our current position, he will have heard today and during the past few months that we have a consistent view: it is right for the people of this country to have a chance to say whether they want to go into a fundamentally different Europe or to stay where they are at present. I am surprised that the Foreign Secretary is using this opportunity to launch a smokescreen political attack, which is part of an agenda that has been running for some weeks, trying to pretend that the argument is about staying in or getting out of Europe. When will he understand that this is a serious debate about the democratic rights of the people of this country and that he should concentrate on that?

Jack Straw: The manifesto that I stood on in 1983, along with many other loyal members of the diminishing band of Labour MPs from that era is a matter of record. It proposed that we should leave the European Union. To respond to the right hon. Gentleman, I reinforce an excellent point made yesterday by my hon. Friend the Minister for Europe: in every election since 1970, the party that stood on a rabid anti-European platform was rightly defeated. We were defeated in 1983 and the Conservatives were defeated in 1997 and again in 2001. We learned the lesson; the sad fact is that, far from learning the lesson, the Conservatives have been reinforced in their ignorance and their blind conviction that the policy that led them to defeat in 2001 was right rather than wrong.
	The one person who at least has the merit of consistency is the hon. Member for Stone (Mr. Cash) who was the lieutenant-general of the Maastricht wreckers. It is a real delight to see him in his current position, directing the policy of the rest of the Conservative Front Bench. What a humiliation for the right hon. Member for Devizes. We know his real views, yet he is forced—squeezed between the hon. Member for Stone and the leader of the Conservative party—into an excruciating position, in which he palpably does not believe.
	It is hard to reconcile the views of the Tory party with continued United Kingdom membership of the European Union.

Richard Shepherd: That is ridiculous.

Jack Straw: Well, three weeks ago, an interesting interview was published in the Financial Times about
	"Bill Cash, the shadow attorney-general . . . who said last night that the 1972 European Communities Act should be amended to reassert the primacy of the UK parliament".
	In other words, that we should get rid of the central requirement of our membership of the EU—that EU laws, if we agree with them in our system, should override United Kingdom law. The article continued:
	"One shadow cabinet member said: 'There's a Bill Cash . . . camp that want him"—
	the right hon. Member for Chingford and Woodford Green (Mr. Duncan Smith)—
	"to commit to renegotiation of Britain's relationship with Europe, which they will deny is code for withdrawal but it is code for withdrawal . . . There are others, including Michael Ancram . . . who is saying no, let's say something positive about Europe'."
	The "let's say something positive about Europe" tendency has not been markedly in operation today, or during the past six months.

William Cash: Every word that the Foreign Secretary utters demonstrates that he does not understand the treaty that he is supposed to be negotiating. The fact is that under our present arrangements, if this treaty went through we would need to change the European Communities Act 1972 in order to guarantee the sovereignty of this Parliament; because otherwise, the constitution would be like a cuckoo in the nest and would take us over.

Jack Straw: rose—

Madam Deputy Speaker: Order. Perhaps, before the Foreign Secretary replies, I might remind all hon. Members that some reference to the word "referendum" would be helpful.

Jack Straw: I simply say, Madam Deputy Speaker—arguing the case against a referendum—that the shadow Attorney-General is yet again drifting into the realm of fantasy. There is no substantive difference between the draft provisions in the draft convention, which yet could still be improved—we will look to that—and what is in section 2(2) of the European Communities Act 1972.

Several hon. Members: rose—

Jack Straw: I must make progress; this is a short debate.
	Given that the tendency that now wishes to see the United Kingdom gradually forced out of the European Union is now in control of the Tory party, the British people are presented with a clear choice: a choice between a party that seeks to play a patriotic role in the European Union to boost British jobs, British prosperity and British influence; and a party that seeks—[Interruption.]

Madam Deputy Speaker: Order.

Patrick McLoughlin: rose—

Jack Straw: I will not give way for the moment because I want to make progress.
	Now, Madam Deputy Speaker, I come to the issue that you asked me to address directly. In the United Kingdom there is no hard and fast rule about which issues should go to a referendum and which should not, and the weight of an issue—its gravity—cannot be the sole test. We have routinely held referendums on second-order issues such as Sunday drinking in Wales. We have never held referendums, nor has any other country of which I am aware, on the most critical question that can ever come before any Government, but particularly a democracy: whether to go to war. Nor have we held referendums, nor would I ever suggest that we should, on crucial issues of taxation or public spending.

Graham Allen: Will my right hon. Friend give way?

Jack Straw: I promise to give way in a second.
	Although there is no iron rule on the holding of referendums in the UK, in practice we have held referendums to determine whether to change our constitutional arrangements dramatically. Contrary to the implication of what the shadow Foreign Secretary said, there has been only one United Kingdom-wide referendum in our history. That was 28 years ago—the 1975 poll on whether to stay in or leave the European Union. In our judgment—I do not think that it is a matter of argument across the Chamber—whether Britain should adopt the single currency or not belongs in the same category of constitutional importance. However, all the other referendums have taken place in separate parts of the United Kingdom. Thus in the late 1990s we held referendums about whether to have a Scottish Parliament, a Welsh Assembly or a London Mayor.
	In each of those examples, the choices have been very stark and the alternative consequences have been clear. You stay in the Common Market or you leave. You have a Scottish Parliament or you do not. You have the euro or you have sterling. What successive Governments have not done is to hold a referendum on whether to approve changes to the existing institutions to which we belong. Back in 1993, the anti-European zealots, led by the hon. Member for Stone and the present Leader of the Opposition, used the referendum device as a tool to disrupt and delay the Maastricht treaty, and for that reason a majority of Conservative MPs would have nothing to do with it. I am glad that the deputy leader of the Conservative party says that he has changed his mind on that in the past six months. I cannot imagine the significance of six months ago—December 2002—given that the Convention has been in operation for the past year.

Michael Ancram: The least that the Foreign Secretary could do is to listen to the debate, even if he is not going to answer it. I said that we formulated this policy in relation to the Convention six months ago, when we understood the direction that the Convention was going in. Had we done so a lot earlier, we would have been in exactly the position that he is in, saying that he will not hold a referendum whatever comes out of it.

Jack Straw: It is lucky that the Tory party does not have a freedom of information Act; otherwise, we would discover the real reasons for this extraordinary change of policy by the right hon. Gentleman, when he not only voted against a referendum on Maastricht, with 11 other members of the now shadow Cabinet, but actively argued against it on strong grounds. He has turned on his head and changed his mind.

Graham Allen: I thank my right hon. Friend for his generosity in giving way yet again and for making it clear today that Parliament will have a role in this matter prior to the IGC. First, will he let us know when he can come to the House or in some other way let hon. Members know the format of such debates? Secondly, obviously the IGC is in the hands of the Executive, but in order that Parliament's decision is not in the hands of the Executive, will he make it clear that he will press for a free vote among all hon. Members, as we go through the steady discussions on these matters? Otherwise, we shall merely be rubber stamping what he is saying at the IGC.

Jack Straw: We shall come forward with detailed proposals about examination upstairs. As far as debates on the Floor of the House before we rise for the summer recess are concerned, there will be a full day's debate next Wednesday on the business for the Council at Thessaloniki the next day, on a Government motion for the Adjournment. There will then be the usual statement in response to that Council. We have also already agreed internally—I do not think I am giving anything away; it is too bad if I am—that there should be a full day's debate on the Convention thereafter, before we rise for the summer recess.
	On the other matter about whether we have a free vote, I am afraid that I cannot accommodate my hon. Friend, for reasons of which he was well aware when he was a Whip.

Patrick McLoughlin: Will the right hon. Gentleman give way?

Jack Straw: I will, but then I must make progress.

Patrick McLoughlin: The Foreign Secretary says that we want a referendum simply because we want to withdraw from Europe. I do not believe that; that is not our position. But if that is the case, why is the Foreign Secretary so afraid of holding a referendum? I do not believe for a moment that the British people would want to pull out of Europe, but I do think that they might have serious concerns about this constitution. Is the right hon. Gentleman just too afraid of losing the referendum and being in the same position as the Irish Government and the Danish Government were in when they asked the people what they thought?

Jack Straw: I hope that the hon. Gentleman will give me credit for this. I am not afraid of having an argument with anyone. That is not the issue. There is a serious issue here, and the hon. Gentleman knows very well that there is. It is that the default setting for determining issues, including whether we sign treaties, must be this Parliament. I believe that Parliament should be sovereign. I have spent 25 years in this place arguing for that. I accept that there are sometimes occasions when referendums are appropriate. I have set out the basic rule that Governments of successive parties have tended to follow. As I have said, I do not believe, on any analysis, that this set of proposals involves a fundamental change in the nature of the relationship between the European Union and its member sovereign states and therefore I believe that a referendum is not appropriate.

David Heathcoat-Amory: rose—

Jack Straw: I want to make progress. I am very sorry.
	We must draw on our previous experience. Given the contents of the Single European Act in 1986, or of the Maastricht treaty, each of those changed the nature of the relationship between us and the European Union far more fundamentally than the current proposals would. The Single European Act in 1986 introduced qualified majority voting on all internal market measures, from free movement of workers through transport policy to health and safety of workers. Thousands of directives and regulations have been passed using articles extended to QMV in the 1986 Act.
	Maastricht extended the scope of the Union's activities over a much wider area. It produced the pillar structure, with chapters on justice and home affairs. European political co-operation became a common foreign and security policy and we agreed on a possible future common defence policy. There were new chapters on economic and monetary union, social policy, culture, public health and consumer protection. There were further extensions of QMV, including on visas, public health, education, and mutual assistance in the event of balance of payments difficulties. Maastricht also introduced the concept of citizenship of the Union and it boosted the role of the European Parliament by introducing the co-decision procedure.

David Heathcoat-Amory: Is the Foreign Secretary saying that whatever the outcome of the Convention, he will deny us a referendum? Let us suppose that he is wrong. Supposing there are very big changes in our relationship with the new Union, supposing all these new constitutional changes come to pass, is he saying that in all eventualities, whatever the outcome, he will deny us a referendum? Is that his clear and settled position?

Jack Straw: First, the Convention is deciding nothing, as the right hon. Gentleman knows. The crucial issue is what is decided at the intergovernmental conference. Whatever the Convention decides is a matter for the IGC. The best judgment that we can make is that the outcome of the IGC will not fundamentally alter the nature of the relationship. We shall be one of the countries at the IGC with a veto on what goes in the treaty—there is a completely different operation to that of the Convention—and we shall be able to ensure that safeguards exist. I understand why the right hon. Gentleman asked his question but the situation would not arise.

Crispin Blunt: rose—

Jack Straw: Let me go on and deal with the constitution, because this is the Conservatives' time.
	Let us be clear that the EU already has a constitution. It already has the authority for its laws to override those of member states for matters on which we have agreed that it should be able to do so. The problem is not whether the EU has a constitution but the fact that its constitution is to be found in several lengthy treaties, each of which grants it different powers. The EU already has a legal personality with respect to European Community treaties but the right hon. Member for Devizes maundered on about that as if it were a new idea. It is not a new idea because otherwise it could have not signed up to other treaties at a EU level. However, that situation means that our citizens' ability to access information about the EU is undermined.
	I have consistently supported a single coherent text. The crucial thing is not the text's label but what it contains. We need a document to set out what the EU is, what it does and how it does it. The document should define the role and powers of the Union's institutions and its relationship with member states, and it should improve the Union's ability to deliver practical benefits to Europe's citizens.

Several hon. Members: rose—

Jack Straw: I shall not give way because I want to make progress.
	Contrary to the assertions made by the right hon. Member for Devizes, we have not sacrificed vast swathes of national sovereignty through the Convention and nor shall we do so at the IGC. The Convention's president has declared that the outcome will be a union of states. There are no references to a federal union in the current text, for one good reason: it will not establish a federal union—I would not be part of the process if it did. There will be no such reference in the final draft.
	The right hon. Gentleman failed to mention why it was decided at Laeken two years ago that we needed the Convention on the Future of Europe. The reason was not because there were barking-mad zealots on the other side who were trying to wreck the sense of national identity of the French, the Germans, the Italians, the Estonians and the British and to turn us all into clones of Brussels. The proposals were made at Laeken because the way in which the Union was established in the 1950s was appropriate for a Union of six nations, but not for a Union of 15 nations. The Union can still less operate efficiently or effectively with 25 nations.
	We are sensibly accepting the case for extending qualified majority voting on several matters. The right hon. Gentleman's arguments implied that several smaller European countries, three of which contain a population of fewer than 1 million people, should have the right of veto over key changes that we believe should be made. We also want the Council of Minister—the council of nation—to operate more strongly and effectively against the Commission, which he completely failed to mention. At the moment, power has shifted from the Council of Minister—the council of nation—to the Commission because the Commission is permanent while the other institutions have a rotating presidency. That is okay with six members and is just about okay with nine members, but the system does not work with 15 members and it would be impossible to make it efficient with 25 members. A permanent chair of the European Council would be directly accountable to member Governments and member states and would create greater efficiency and effectiveness on our behalf.
	I turn to the constitution proposed by the Tory party. I am an assiduous reader of Conservatives.com. [Interruption.] The Tories are not. When I read it, I found that Timothy Kirkhope, the Conservative party's official representative on the European Convention, has unveiled his alternative to the European constitution. He says that he has consulted widely with European colleagues and other Conservatives.
	Timothy Kirkhope proposes an amendment to the Praesidium's draft that would provide that the European Parliament should have the right to initiate legislation. Does the right hon. Member for Devizes understand what the Conservative party is proposing? We have heard about European superstates but we would end up with a European federal superstate if the European Parliament had the right to initiate legislation.
	The Conservative party's official representative on the Convention goes a bit further. He says on Conservatives.com that the Commission should cease to operate between the European Parliament and the Council and should become the civil service of the Parliament. If the Parliament initiated legislation, it would have to do that through representatives. I rather fancy that they would be called Ministers, such as the Minister for social security and the Minister for the economy, and they would have a civil service. Does what the Conservative party's official representative on the Convention has described on Conservatives.com represent official Conservative party policy?

Michael Ancram: May I tell the Foreign Secretary that the debate is about letting people decide? We are prepared to let people decide, but is he? That is what we are waiting to hear.

Jack Straw: We need to know about policy. I ask the right hon. Gentleman again whether the website outlines official Conservative party policy.

Michael Ancram: The document is the view of Timothy Kirkhope. It is not Conservative party policy.

Jack Straw: I have a final question: what the devil was the document doing on the Conservative party's official website? Why was Timothy Kirkhope described as the party's official representative on the Convention if his document is not official policy? Even the new model leadership of zealots in the Tory party cannot agree among themselves. The right hon. Member for Devizes protests about minor changes to the nature of the relationship but his colleague, the official representative, has produced page after page of proposals to give the European Parliament legislative power.

William Cash: While the Foreign Secretary is praying in aid representatives on the Convention, will he repudiate the comments of the Labour representative, Lord Tomlinson, who said in the Standing Committee on the Convention the other day that the Laeken declaration did not give authority to the production of the constitution?

Jack Straw: If Lord Tomlinson said that, he was wrong.

Angus Robertson: On the issue of party unity on key issues, the Foreign Secretary will be aware that the extension of exclusive competence over fisheries is a matter of controversy in Scotland. His colleague, the Labour First Minister of Scotland, told my friend the Leader of the Opposition in Scotland in the Scottish Parliament two weeks ago:
	"Not only is this Administration opposed to it, but the UK Government is opposed to it."—[Scottish Parliament Official Report, 29 May 2003; Vol. 1, c. 251.]
	He also said that the UK Government had written to the European Union to oppose the extension of exclusive competence over fisheries. Have the UK Government written to the EU, or is there a split in the Labour party on the issue?

Jack Straw: We are an indivisible whole, as ever. With respect, I do not claim expertise on the common fisheries policy but I shall write to the hon. Gentleman—[Interruption.] Well, either he wants an accurate answer or he does not.

Angus Robertson: I wrote to the Foreign Secretary last week.

Jack Straw: I shall write to the hon. Gentleman.
	Having established that the Conservative party has two policies—one against any change, one in favour of complete change to alter fundamentally the role of the European Parliament—let me say what we want. We want the Convention to define more clearly matters on which the EU has exclusive power, on which powers are shared between the Union and member states and on which the EU should act only to support national policies. There is an emerging consensus in support of the UK's position for the introduction of a new mechanism to ensure that the Union respects the principle of subsidiarity, acting only to achieve things that national or regional Governments cannot do for themselves. Under our proposed system, national Parliaments would quickly review each EU proposal, judging whether action is being taken at the right level and in the appropriate way. That would not amount to a veto, but should a majority of national Parliaments judge that a proposal infringed the principle of subsidiarity, the Commission would quickly get the message.
	To deal with an issue raised by hon. Members on both sides of the House, an EU-wide consensus on aspects of foreign policy is sometimes unattainable, as we saw during the months preceding military action in Iraq. As a country with global interests and as a permanent member of the UN Security Council, the UK firmly believes that the process must remain intergovernmental, recognising that national Governments have to be accountable to their own Parliaments for their decisions on foreign, security and defence policy. It is in our interests to arrive at a common policy with other member states wherever possible, but to attempt to manufacture a single policy on every issue would be absurd. We have resolutely opposed proposals in the Convention to "communitise" common foreign, security and defence policy. We will continue to do so in the IGC.
	In other areas—not least the single market—qualified majority voting has long served our interests. That was why Mrs. Thatcher supported the principle of QMV. Indeed, the text of the draft constitution, which the right hon. Member for Devizes has clearly not read, proposes that QMV should be the standard method of making decisions unless the treaty provides otherwise. Judging by some of the remarks that we have heard, however, one could be forgiven for thinking that the Opposition are opposed to QMV in any way. One area that is ripe for an extension of QMV is asylum, to help provide firm, collective action to deal with illegal immigration and the criminality that underlies it.
	The hon. Member for Stratford-on-Avon (Mr. Maples) mentioned the constitution. It will include a statement of rights. I, for one, think that our citizens should be told the rights that they have vis-à-vis European institutions. We can accept such a statement provided that it does not extend the powers of the Union. We have not yet taken a final decision on whether we will agree to the proposals to incorporate the charter. Like much else, that will depend on the precise terms of the final package. Perhaps I should have told the House this earlier, but my right hon. Friend the Secretary of State for Wales and my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) are not here because there is an important meeting of the Convention in which both are participating. We still do not have the full text. The right hon. Member for Wells (Mr. Heathcoat-Amory) has decided to be here, but it is right that my colleagues remained in Brussels.

John Maples: The point I was making was not whether the Convention extends the competences of the Union, but whether it gives rights to individuals or groups to challenge their domestic legislation on the ground of something that is contained in the charter, which is largely about political rights. If the European Court of Justice is able, on the basis of the charter, to review domestic legislation of a member state, that is a fundamental change.

Jack Straw: We have negotiated two important safeguards. To pick up on a point raised by my hon. Friend the Member for Nottingham, North (Mr. Allen), those should be examined in great detail once we have the Convention's final proposals before we go to the IGC. We want to ensure that what we are doing at the IGC has the support of the House.
	The two safeguards are amendments to the so-called horizontal articles, which apply across the board to all treaties, to help define the scope and meaning of the charter's provisions, in particular those that correspond neither to the European convention on human rights nor to community law. We have also secured agreement to give the commentary on the charter's provisions enhanced status. That, too, is vital in guiding an interpretation of the charter. The net effect of that should be to ensure that the charter does not extend the Union's competence or powers. Those are important safeguards and I hope that we discuss them much further in due course.
	Contrary to much of the hysteria and hyperbole that we have heard today, the current draft constitutional treaty shows that we are making progress towards our kind of Europe: a union of sovereign nations, not a superstate. The Convention's text is a good starting point for the lengthy negotiations in the IGC. It should help to settle the balance between nations and the Union to ensure that it is where it should be—with the nations as the anchor of the Union.
	In the IGC we will continue to play a central role in the process of reform aimed at making Europe more efficient and more easily understood, not least so that we can use it more effectively to advance the interests of the British people. We are not talking about substantive fundamental change in EU-wide powers. There is therefore no case for a referendum. We are talking about a treaty that can bring much needed clarity to European citizens and equip the Union with the machinery that it needs to embrace the challenge of enlargement. This is a great prize for Britain, a prize that we will pursue unrelentingly in the coming months.
	I urge the House to accept the amendment and to reject the motion.

Michael Moore: In recent debates on Europe we have heard plenty of arguments about the principle of having a referendum on the proposed developments in the European Union. Today that issue is right at the heart of the debate. Once again we have had history lessons which, not for the first time, reach opposing conclusions from the same basic set of facts. I do not want to dwell on those spats between those on the Conservative and Labour Front Benches. What is surely of importance now is that we make clear how we should assess the need for any future referendum, and at what stage that might take place.
	In the absence of written constitutional guidance, the development of the use of referendums in this country has been haphazard. On Second Reading of the European Union (Accessions) Bill on 21 May, the Foreign Secretary gave a fair account of the complexity of the issue. Indeed, he was in danger of plagiarising his own remarks when he repeated much of the same argument today. He said then, and again today, that the gravity of the issue should not be the sole determinant: we may hold a referendum on Sunday drinking in Wales, but have not, and would not, on the issue of going to war. However, he also said:
	"Although there is no iron rule, in practice we have had referendums to determine whether to change dramatically our constitutional arrangements."—[Official Report, 21 May 2003; Vol. 405, c. 1031.]
	That may not be an iron rule, but it is surely not a bad basis for the tests that we should set.
	We also need to understand the context. Talk of referendums tends to get people rather excitable—so before we all get too carried away we need to reflect on what is at stake for the United Kingdom. Last week we completed the Commons stages of the European Union (Accessions) Bill, welcoming 10 new states into the Union, and so marking the most significant development in Europe in decades.
	The impact of enlargement of the EU from 15 to 25 has yet to be realised, or even to sink in, but it will be unlike anything we have seen before. For many of the accession countries it is a further symbolic and real break from their communist past. It offers unprecedented opportunities for them to enjoy greater security, for their economies to grow significantly and for democracy to become further entrenched. As we see from the referendums held so far in the new member states, those benefits are widely recognised and supported by the people in each country. Existing members, too, stand to gain from significantly enhanced trade and greater European security.
	The scale of change is unprecedented. Never before have so many new members been admitted at one time. Indeed, more countries are expected to join the EU in one go next May than in all the previous enlargements put together. Nobody can fail to realise that that scale of development requires significant change in the way in which the EU operates. In the Convention on the Future of Europe, delegates have been toiling for months to produce a new template. In a few days' time, it will be offered to Heads of State and Governments as a draft treaty for consideration. At that point, we will be able to begin the assessment of what the treaty may mean for the United Kingdom.
	Regardless of enlargement, the EU is in need of reform. Successive treaties and laws have made the European institutions hugely complex, bureaucratic and increasingly remote from the people whom they are meant to serve. What is needed is clarification and rationalisation—a codification of the purpose of the European Union making clear links with its citizens, setting out what it can and cannot do, enshrining the principle of subsidiarity, and making it clear that it is a union of sovereign nation states, not a putative European superstate.

Ann Winterton: The hon. Gentleman is doing something which is often done in the House. He is giving a wish list, and is describing the way in which he would like the European Union to develop. That is not on offer. When the treaty is made, it will deepen the role of institutions in the European Union, and will not achieve what the hon. Gentleman wants.

Michael Moore: The hon. Lady will have an opportunity to set out her case if she catches your eye, Mr. Deputy Speaker. Surely, however, we are having this debate because at this stage we do not know what the Convention's final solutions or suggestions will be.

Graham Allen: Are not the people who want to move fastest on the European project its greatest enemies? Without taking others with them, they will produce a wider distance between the project and the people who are meant to be supporting Europe. People fall into that trap by not, for example, going out and campaigning now for a referendum on the euro, or by not campaigning for one, two, or perhaps even three years on a European constitution. That helps to confirm the Opposition in their view of the content of that constitution, so we are in danger yet again of distancing the people from the European project.

Michael Moore: I do not disagree with the hon. Gentleman. On the euro, for example, we have long argued that a case needed to be made for it, and we should get on and make it. As for what is on offer as the Convention and the IGC proceed, I ask the hon. Gentleman to bear with me for a few minutes, as I am about to set out our position.
	I was saying that we need clarification and rationalisation of the EU. It is right that there should be a statement of rights for individuals, which is the key to citizens understanding their direct link to the EU and what it means for them. It is also right that there should be an explicit statement of the respective roles of national Parliaments, Governments and the EU institutions. Beyond those important principles, it is right that new structures should be developed to improve the efficiency and effectiveness of the European institutions.

Paul Tyler: I am listening with great interest to my hon. Friend. Is it not a simple fact that if John Major had pursued his policy of subsidiarity, which many of us feel is an integral part of this exercise, there would have had to be a constitutional settlement in Europe? I do not understand why some Conservatives oppose any constitution for Europe.

Michael Moore: My hon. Friend makes a good point.
	We do not yet know how far the Convention's final draft treaty will go, but clear statements of principle, simplifying the complex mess of existing treaties and embracing reform, should scare nobody. If that type of reform were packaged and described as a constitution, that would not be particularly dramatic. If, however, there were major shifts of control, such as transferring significant new powers from member states to the European institutions or altering the existing balance between the states and those institutions, we would have to assess the constitutional implications for this country. Those are the tests against which any call for a referendum should be measured. However, we do not know the outcome of the Convention's deliberations and it would be foolish to prejudge them.
	We must hope that when the Convention's deliberations are completed the Government and parliamentary representatives, as the Foreign Secretary suggested, will report back to the House and we will have the chance for a full and proper debate on its conclusions. That would also provide an opportunity for the Government finally to publish a White Paper on their policy for the intergovernmental conference which will follow.

Graham Allen: Will the hon. Gentleman give way?

Michael Moore: If the hon. Gentleman does not mind, I will not, as I have given way a number of times.
	Ministers have resisted calls for a policy paper, but surely once the draft treaty has been published they cannot resist any longer. As we are talking about increasing openness and accountability in the European Union, why should the Government not lead by example and set out their proposals clearly and concisely? We hear much about the diplomatic red lines around issues that they will not concede, but what about the vision? Where is the grand plan? The IGC will no doubt be long and arduous, but it may surprise us and surpass historically low expectations, delivering more the proposals with which it began. We will not hold our breath but, whatever our expectations, only when a final treaty is available will we be able to assess the constitutional impact for this country and for Europe. Only then should we decide whether or not a referendum is needed.

Michael Ancram: Does the hon. Gentleman agree with Lord Ashdown, who said some time ago:
	"The only way to debate these issues and to arrive at a popular conclusion that will stick is through a referendum in which voters are, at last, welcomed in the secret garden of European policy"?
	That is a sensible comment. Does the hon. Gentleman agree with it?

Michael Moore: My noble Friend has made a number of very sensible speeches over the years, and that is one of them. If the right hon. Gentleman had been listening to me, he would have learned which tests we think are necessary to establish whether or not there should be a referendum.
	Already the Government and Opposition spokesmen have run for cover, digging themselves into their bunkers and making decisions before common sense suggests that it is wise to do so. Having set out a perfectly sensible case for determining the need for a referendum, the Government have now prejudged everything. Without even a final draft from the Convention, never mind the IGC, their amendment states boldly:
	"there is no case for a referendum".
	We cannot support the amendment in the form in which it has been drawn up, and will vote against it if we have the opportunity.
	As for the Conservative spokesmen, let me try to be charitable. Perhaps their efforts today are not simply a response to the cries from certain hysterical sections of the press. Perhaps their motion is not simply a device to allow them under the cover of a referendum to question the UK's continued membership of the European Union. But it seems strange that they, too, have prejudged matters. If what emerges from this process is long-needed reform of the EU, a clear statement of the citizen's place in Europe, and a better codification of the relationship between member states and European institutions, that will be very welcome. But the changes will not necessarily have constitutional implications for this country, whether the word "constitution" is slapped across the front of the treaty or not. We should not prejudge that process, and for that reason we cannot support the Conservative motion.
	As the Convention concludes its work and the Government prepare their position for the IGC, we should turn our attention to the specific proposals that have been made. It is crazy to rule a referendum out, but it is equally daft to demand one now. Let us see the treaty, judge its character and then make the decision.

Keith Vaz: I shall be brief because I know that time is short. It is right that the hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore) should remind the House of why the Convention was set up. What depresses me about the Conservatives' policy on this issue, and, indeed, more generally on Europe, is the fact that they keep trying to tell the House and the country that they are in favour of enlargement but, at the same time, they want to use every opportunity to send a message to this country and the countries that will be part of the European Union that they are against enlargement. The Convention's purpose is to modernise the way in which the European Union operates and prepare it for enlargement. What was good enough for six countries was just about good enough for 15, but it will not be good enough when the 25 are formed on 1 May. The right hon. Member for Devizes (Mr. Ancram) will join me and others, including my right hon. Friend the Member for Gateshead, East and Washington, West (Joyce Quin) and the shadow Minister for Europe, at a reception that is being held today in the Members Dining Room, where representatives of the applicant countries and the descendants of people from the enlargement countries will participate in the first enlargement celebration here in the House of Commons.
	What a sad message the right hon. Gentleman is sending out. The Conservatives' policy was opposed to the Nice treaty. They wanted a referendum on the Nice treaty. In other words, they wanted to block enlargement. That would have been the effect of their campaign. [Interruption.] Exactly. The referendum would have been lost and enlargement would have been blocked—exactly what the Conservatives wanted. The purpose of Nice, of the decisions taken at Laeken and of the Convention is to prepare us, as the hon. Member for Tweeddale, Ettrick and Lauderdale has just said, for the enlargement process.

David Heathcoat-Amory: None of the applicant state members on the Convention, of which I am a member, has ever made the point that the constitution is necessary for enlargement. They are joining on the basis of the Nice treaty, and they will probably join on 1 May next year, before the constitution is even ratified, so the hon. Gentleman's comments are very wide of the mark.

Keith Vaz: No, they are not. As the right hon. Gentleman knows, after the proposals are put forward, as the Foreign Secretary said, there will have to be a discussion at the IGC, of which the applicant states—the new members, as they will become on 1 May—may well be a part. If the IGC is concluded when they are members, they will have an opportunity of participating in those important decisions, as they have been observers to the Convention. I have met a number of people from applicant countries, and I have heard nobody say to me that they are unhappy about the position taken by the United Kingdom.
	As a former Minister, the right hon. Gentleman will know that when he went to the Council of Ministers, as did other former Ministers on the Opposition Benches, he went there to fight for the interests of Britain. He did nothing that was not in the national interests of Britain. That is exactly what my hon. Friend the Minister for Europe and my right hon. Friend the Foreign Secretary do when they go to European Union Councils of Ministers. They go to represent our country and to do what is best for us.
	What has been set out is a simple process. The Convention will put forward its proposals. As backing for that assertion, I can quote Valéry Giscard d'Estaing on the "Today" programme on 16 April, when he made it clear that those were proposals. They will eventually have to go to an IGC and be agreed by the Heads of Government, which means by our Prime Minister. That will be the opportunity for us to block anything that is not acceptable.
	I respect the views of the right hon. Member for Devizes on a number of issues, and I am saddened that he is not prepared to be more specific as to why he supported parliamentary scrutiny of the Maastricht treaty, but suddenly, because there is a referendum in Hartlepool, he has changed his mind and decided that we must have a referendum on every single aspect of European policy.
	The right hon. Gentleman knows, as does his hon. Friend the hon. Member for Stone (Mr. Cash), the huge implications of the Maastricht treaty. That is why the hon. Member for Stone has been so consistent, and I respect him for his consistency. He called for a referendum on Maastricht because of the huge significance of its proposals for the common foreign and security policy, qualified majority voting and all the other issues. But that was not the opportunity, in his mind, for a referendum on the Maastricht treaty, and there is no need for a referendum on the Convention. The work of the Convention is still not over.

Richard Shepherd: As the mover of an amendment in the debates on a referendum on Maastricht, I am conscious that many hon. Members across the House appreciated that it was a major constitutional issue. The gathering together of such major constitutional issues without any endorsement, validation or action of consent by the people has diminished the effectiveness of the European Community in this country. That is a matter of principle. Nothwithstanding the minor amendments to the treaty that the Government postulate—although I do not think that that will happen—ought not the Government to give the people an opportunity to take a view? They have had many years' experience of the ever increasing powers of the institutional arrangements.

Keith Vaz: I understand the hon. Gentleman's point, but what diminishes Europe in the eyes of our people is not the failure to hold a referendum, but the hysteria that surrounds every discussion of a European issue. Right hon. and hon. Members on the Opposition Front Bench will jump on any passing European bandwagon in order to do down Europe. It is the intention of Members such as the hon. Member for Stone to get Britain out of the European Union. That is the purpose that they are trying to achieve.
	The failure is our failure as a Parliament, and the failure of our press properly to reflect the views of the country, as expressed in a general election. I should like us to campaign much more as a Parliament and as individual Members of Parliament about the benefits of Europe. I know that the Minister for Europe is doing exactly that, with his excellent campaign to go to 100 towns and cities in the United Kingdom to tell the people about enlargement. That is what the Prime Minister spoke about on Monday and Tuesday, when he spoke about the need for us to talk about the euro in a positive and constructive way.
	We will have a referendum on that, but if we start screaming and shouting every time the word "Europe" is mentioned, and we have referendums conducted by the Daily Mail, why bother about Parliament? We can get the Daily Mail to conduct the next general election. People can cut out tokens from the Daily Mail to vote for their local MP. The point of Parliament is that it should scrutinise major constitutional issues.

Angus Robertson: Why does the hon. Gentleman refuse to view the option of a referendum as a tremendous opportunity to put the case for a European Union that is a confederation of sovereign states, not a Eurosceptic vision? There are many in the House and elsewhere, including the principal opposition party in Scotland, who are committed to a referendum so that we can make the case for a reformed European Union. Why not jump at the opportunity and make the case?

Keith Vaz: There would then be no point in having a Parliament. What is the point of Members of Parliament? What is the point of the right hon. Member for Wells (Mr. Heathcoat-Amory) and my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) going to represent Parliament? I do not agree with what the right hon. Gentleman has done and said, but I pay tribute to him for his hard work. What is the point of having Members of Parliament and Ministers? Let us have a referendum on everything. I know that that is the policy of the Scottish national party.
	We are to have a referendum on the euro—in the lifetime of this Parliament, I hope—if the conditions are met, but I do not believe it is necessary to have a referendum on every single aspect of European policy. If it was not good enough for Maastricht, which massively increased QMV, then it is not good enough for the Convention. We are dealing with the first stage of the proposals. The House need not take that from me—take it from the President of the Convention. The Heads of Government have not even considered it. Ministers in our Government have not done what all Ministers have done for the past 20 years, which is to look at the final proposals and act in the interests of the United Kingdom.
	My final point is about the necessity for the proposals described by the Foreign Secretary to come before Parliament at the earliest opportunity. I hope that the Minister for Europe will tell us more about those when he winds up the debate. I valued the fact that the right hon. Member for Wells and my hon. Friend the Member for Birmingham, Edgbaston have come before the House in Committee on a number of occasions to tell us about the work that they are doing. Those proceedings have been chaired by my hon. Friend the Member for Stockton, North (Mr. Cook) in a Room on the Committee Corridor. There has not been enough time to go through all the various issues that have been raised and I hope that the Committee will have more sittings before the Convention completes its work. But it would be good if that Committee had an opportunity to go round the country to our major cities and listen to what people have to say about Europe. It would provide us with the opportunity to listen to local people on the issue. The final decision must be made by Parliament, but we should listen to local people, and that is one way in which we can take Europe to the people. Making Europe more accessible to ordinary people is exactly what the Convention intended to do, and perhaps we can achieve that by using our Standing Committee procedure.
	I shall support the Government amendment today. This is not the kind of matter that should be put to a referendum. It is quite different from the deliberations on the euro. I hope that the process of going out to the country will embrace all hon. Members, not just the so-called pro-Europeans. We all—including the shadow Foreign Secretary, the deputy leader of the Conservative party—have an interest in going out and selling the benefits of Europe. If the right hon. Member for Devizes does not do it, it will mean that he backs the hon. Member for Stone in his desire to take Britain out of the European Union.

John Maples: The hon. Member for Leicester, East (Keith Vaz) seems to inhabit, as do so many other enthusiasts for the ever-advancing European Union, an Alice in Wonderland world in which they consistently pretend that things are otherwise than they are. If one listens to what people say, talks to a German Christian Democrat in the European Parliament, listens to Mr. Prodi or most of the Commission, or reads what is in the Convention's output, it is pretty clear that we are on an inexorable road towards a federal Europe, or whatever one wants to call it. To deny that seems to be to deny reality.
	There is a perfectly respectable argument for a united states of Europe. It is a position held by some Liberal Democrats, some Labour Members and some Conservative Members. One can argue that the only way that Europe can be successful in the modern world is to group its resources, power and influence, and that the price of sacrificing a great deal, if not all, of one's national sovereignty is worth paying. Or one can argue the case that I and a great many of my colleagues argue. But what one cannot do is pretend that what is happening is what I want to see happen, because it is not. It is radically different.
	Last week, a team of Members of the House of Commons competed in a sort of "University Challenge" against members of a team from The Times. I will not mention who was on the team, but they did not do very well. I want to ask the Minister—if the Foreign Secretary were here, I would ask him too—to imagine that we were on that team and that the following question was posed to us. I think that it is one that my hon. Friend the Member for Stone (Mr. Cash) would have answered correctly, but I think that I know what the Minister would have said. The question is this: what does one call an organisation that has a constitution, a president, a foreign minister, a parliament, a Bill of individual rights, a supreme court, a currency, a central bank, citizenship, the power to accede to international treaties, a police force, a public prosecutor, a common foreign and security policy, military capability and common criminal law and procedure, and where federal law overrides state law?
	Apparently, the Minister and his boss the Foreign Secretary would answer that question by saying, "That sounds to me like a grouping of individual sovereign states that have pooled limited amounts of sovereignty to achieve specific objectives." I suggest that they would have done no better than my hon. Friend and his team. My hon. Friend would have answered, "It sounds to me like a state." The fact is that it does sound like a state. Those are the characteristics of a state. I suggest to the Minister and the House that that is where we are heading. I do not think that we are there yet, but in a series of inexorable steps, over the past 20 years and during the next five or ten years, that is where we are going.
	There will come a point down that road at which most of us will want to call a halt and at least examine some of the things that are being done. Let us stop pretending that we are not heading there. Let us stop pretending that that is not what the great engines of the European Union—the French and particularly the German Governments, the Benelux countries, the German parliamentarians in the Commission itself—want, because it is. It is even where most Italian and Spanish centre-right politicians of the European Parliament want to go too. It may be that we are in a small minority, but the fact is that they are at least honest about it, which is more than the Government are, and more than most of the proponents are.

Denis MacShane: Could the hon. Gentleman name a single Head of Government—Mr. Aznar, Mr. Chirac, Mr. Schröder—who is up for abolishing the national identity of his country to merge into a European superstate?

John Maples: Certainly the Prime Minister of Belgium is a pretty willing participant in that process, and I would suggest that Herr Schröder is too. They are willing to have an awful lot of their national identities subsumed. I am not saying that we are there now. I am not saying that the draft constitution will get us there, but it is another step on the road.
	Let me set out for the Minister six fundamental points. If they are dealt with in the negotiations of the IGC, I would be reasonably happy with the treaty, but if they are not, I shall be unhappy with it.
	The first is the pillar structure. The Convention proposes the final collapse of pillar three—that home affairs matters should come under the Commission with qualified majority voting in almost all cases. This is a perfect example of how the EU advances. Home affairs started at Maastricht as pillar three. At Amsterdam, a bit of it came into pillar one. Now the rest of it has gone into pillar one, and we have gradually moved from unanimity to qualified majority voting. That is what happens. When it starts, it all looks perfectly innocent as intergovernmental co-operation, but we end up with the supranational organisation making our laws about nationality and asylum.
	Secondly, I have some real issues about the common foreign and security policy, but the Government have dealt with the most important one, which is maintaining unanimity on setting that policy and in anything to do with defence. But I am concerned about the dual-hatted foreign minister. The position that Solana occupies is perfectly acceptable. We need an instrument for a common voice in areas where we can and do agree. No one would deny that. We have a lot of interests in common and we need to be able to promote them. Señor Solana does a magnificent job in that respect. His position as secretary-general of the Council is right. But if that person is to be the foreign minister with a position in the Council, and dual-hatted as a vice-president of the Commission, I do not see how that will work. He will have divided and dual loyalties with different responsibilities to both. But what worries me far more is that this is the start of the collapse of pillar two. This is the start of bringing the Commission into foreign and security policy. That must remain intergovernmental. That is a fundamental sticking point, and I hope that the Government will resist the dual-hatting of the foreign minister. I do not particularly care what they call him. I would rather that he stayed as secretary-general, but it is important that he does not have a role or responsibility in the Commission.
	Thirdly, as I said to the Foreign Secretary, I am very concerned about the charter of fundamental rights. If it were like the United States Bill of Rights—about freedom of speech, due process and cruel and unusual punishments—few would have much objection to it. We certainly would not want this House ever to pass a law that we felt breached those things. However, it does not deal with that. It is a Bill of political aspirations. It is not a Bill of fundamental legal rights.
	For instance, everyone has a right to a free placement service. Everyone has a right of access to preventive health care. I think that another says that everyone has a right to vocational and continuing training. I am concerned that eventually that will mean that somebody who does not like the provisions that the elected British Government have made in this place for continuing training or preventive health care will be able to challenge them in the European Court of Justice. That is a fundamental alteration in the relationship between member states and the European Union.
	I have looked at the so-called parallel articles. I am continually told by intelligent British diplomats, "Oh, we can get around all this incorporation." The fact is that the Government did not want incorporation. They did not want it in the Nice treaty. They did not want it in this constitution. I hope that they will fight to get it out. I do not believe that any of the articles that they have got in, or for that matter any parallel articles that they could draft, will protect us from the consequences that I have tried to outline. We know about the constructivist nature of the European Court of Justice. If there is a chink in the armour, they will find their way around it, and before we know it they will be telling us, as the United States Supreme Court tells the United States Congress, what we can and cannot pass as legislation.

Keith Vaz: The charter of fundamental rights does not go one iota beyond existing British law.

John Maples: It goes way beyond it. It allows a supreme court—the European Court of Justice—to say that everyone has a right to a free placement service. I do not know quite what that means; I assume that it is something to do with helping people to find jobs. I am happy for us to pass laws about that, because we can repeal them, but if the European Court of Justice can tell us that such laws are unconstitutional, that is a central ingredient—a keystone—of a federal European state.
	Fourthly, we need to strengthen subsidiarity, which is weakened by these articles. We are told that, if enough national Parliaments do not like that, they can—to use the Foreign Secretary's words—deliver a message to the European Commission; a fat lot of use that is. The Commission is not democratically responsible to us, or indeed to anybody, and in the past it has taken no notice at all of the subsidiarity provisions. If subsidiarity is to mean anything, those provisions must be strengthened.
	Fifthly, articles 95 and 308 of the treaty establishing the European Community—which essentially allow the Council to do virtually anything in pursuit of establishing the internal market, and go very wide indeed—must be reined in, because although that mechanism has not yet been exploited to the full, it might well be.
	My sixth point concerns the provision on the right to withdraw. I hope that that remains. That is not to say that I want to withdraw—[Interruption.] I think that the hon. Member for Leicester, East knows that I do not. None the less, the fact that it is there gives us some comfort, because we know that we will not need to have a civil war to decide what the constitution means—if there comes a point when we do not like it, we can get out. That is fundamental.

Teddy Taylor: Does my hon. Friend accept that it is not actually the right to withdraw, but the right to withdraw subject to the approval of the European Parliament?

John Maples: I have to say that I did not read it quite like that, but perhaps it needs some clarification.

William Cash: It is subject to QMV.

John Maples: Yes, I understand that the European Parliament has a role under QMV. However, the right to leave is pretty clearly established. If any member state were to decide that it wanted to do so, it would surely want to negotiate a treaty with the European Union that set out what its relations would be in future. I take my hon. Friend's point, but I think that of my six tests, the Government have comprehensively met that one.
	People will say that a lot of what is in the constitution is in the existing texts. That is of course true, although not all of it is there. That shows how far we have come in 20 years. By a series of salami slices—the Single European Act, Maastricht, Amsterdam, Nice, the Convention—

Keith Vaz: The Conservatives did some of it.

John Maples: I am not saying that we did not play a part in it, but that by a series of salami slices we have come an enormous distance from a grouping for economic purposes—[Interruption.] I wonder if my hon. Friend the Member for Stone could keep his conversation a bit quieter—he is rather putting me off.
	We have come an awful long way from the situation in 1984 to that implied by the Convention. We have moved from a simple grouping of sovereign states to what is very close to a united states of Europe, and we have done so without realising that it has happened. It is an inexorable process that always starts as a series of aspirations—for example, the social charter winds up as the social chapter—that are ultimately enforceable by qualified majority voting. We see that again and again. On any particular matter, one need only get a competence, get it to QMV, get it into pillar one, and that is it—the end of national decision making.
	I should like to propose an alternative. The Minister and the Foreign Secretary say that the Conservative party just wants to get out of Europe, but I do not. My alternative—I first proposed it when I held the job of my right hon. Friend the Member for Devizes (Mr. Ancram)—is to have a more flexible Europe. Some articles in the treaty, which are repeated in the new constitution, allow for flexibility. They allow a group of member states that want to continue through enhanced co-operation to do so. If a group of member states want to set a similar policy on nationality, asylum, continuing education or the right to placement services, I am all for their being able to do so, but such policies should not be imposed. There should be a core of trade and business—a single market. I am perfectly prepared to subscribe to that, because it is of great benefit to us. In fact, for the sake of argument, I would be prepared to draw the line where we are now and go no further, although I should prefer to roll the clock back a little to before Nice. There is a real role for Europe and for a constitution that builds in such flexibility and makes it clear what people's rights are.
	The federalists argue that the only way in which to make a 25-state European Union work is through qualified majority voting everywhere and the Commission having a role in everything. However, I believe that there is an alternative method, through flexibility. That would be a better model.
	The European Union is constantly guilty of trying to run before it can walk. It has a massive unfinished agenda of completing the internal market and its free trade agenda—15,000 individual external tariffs remain—successfully completing enlargement and the long overdue reform of the dreadful common agricultural policy. It would have been far more productive and better for all of us if the huge energy and brainpower that has convened in Brussels to dream up the Convention had been applied to trying to solve some of the problems.
	We are on the wrong track. We are heading inexorably, piece by piece, year by year, competence by competence, QMV session by QMV session towards a united states of Europe. We should be heading in a different direction, towards flexibility. We should stop pretending that our action is other than what it is.
	Before I became a Member of Parliament, I was a lawyer dealing with tax matters. We tried to dream up tax planning methods and schemes that would pretend that something was not quite what it was—for example an insurance policy that did not resemble one. It would be slightly different and have a few characteristics that enabled one to argue that it was not an insurance policy. I asked an American lawyer whether he thought that it would work with the internal revenue service. He replied, "John, the IRS takes the view that if it walks like a duck and quacks like a duck, it is a duck." This is a duck.

Wayne David: It would be useful to begin by briefly examining the point that we have reached in the debate about the future of Europe. It is worth remembering that the Convention on the Future of Europe has not concluded its deliberations. When it does, it will present a report to the intergovernmental conference, which will begin its consideration. The IGC has not determined its timetable for consideration; it has not even met. Nobody is clear about the timetable or the exact way in which it will consider the Convention's report. However, it is clear that the British Government have made several points of principle clear. Time and again, they have made it abundantly clear that they oppose the idea of creating some European federal superstate. They have stated clearly that, if necessary, they will draw lines in the sand on the extension of qualified majority voting and will not accept it for defence, tax or treaty changes.
	If hon. Members are not prepared to accept the comments of our Government representatives, it is worth noting the objective comments of the former President of France, Mr. Giscard d'Estaing, who is president of the Convention. On "Today" on 16 April, he said:
	"The decision will be taken later in what is called an intergovernmental conference, and the decision will be taken by unanimity. So if Britain or another country does not agree, it has a perfect right and a practical right to oppose".
	In other words, if Britain does not want a set of proposals that other countries make—I do not believe that they will make such proposals—the Government have the right of veto. They can say no and that such proposals are unacceptable. Nobody can force them on the United Kingdom. Nobody can dictate to us. What we accept is up to the Government, and their position is clear.
	Nevertheless, the Opposition claim that whatever comes from the Convention and whatever the intergovernmental conference agrees, a referendum must be held. I therefore deduce that they are articulating a point of principle: there must be a referendum, whatever the circumstances and terms. However, if the position is to be credible, it must have some consistency.
	Let us consider the broad development of the European Union since the treaty of Rome in 1957. There are two historic landmarks in its development. Two significant treaty changes brought about fundamental alterations in the nature of the European project.
	The first was the Single European Act in 1986, which was introduced and agreed when Margaret Thatcher was Prime Minister. That was the treaty change that effectively brought about the European Union as we know it today, and made possible the single market, with the free movement of capital, labour, services and goods. That was all made possible by a huge extension of qualified majority voting—the biggest extension of QMV that we have seen to date. But did we have a referendum on that? No, we did not. Was a referendum suggested by the Government of the time? No, it was not. If the Conservatives had wanted to make a principled case for a referendum, they should have made it then. They did not. In fact, the opposite was the case. As I understand it, a guillotine was introduced by the Government of the day to get the measure through as quickly as possible.
	That was one major landmark. The second was the treaty of Maastricht, which brought about a huge extension of the powers of the European Union. It introduced the pillar structure and brought about the basis for economic and monetary union, which we have been debating in earnest this week, and a still further extension of qualified majority voting. It also introduced the concept of European citizenship and a major extension of the powers of the European Parliament. I was an MEP at that time, and I remember being delirious with joy in Strasbourg at the new process of co-decision that was being introduced with the full support of the United Kingdom, which effectively gave the European Parliament the same powers as a nation state over certain issues of policy. But did we have a referendum on that? No, we did not. In fact, as has been mentioned, the right hon. Member for Devizes (Mr. Ancram) argued passionately against a referendum on that profound change in the European Union.
	When we look back, from 1957 to the Single European Act in 1986 to the treaty of Maastricht in 1992, we see that Conservative Members argued against any formal consultation of the British people in the form of a referendum. Yet today they argue for a referendum on something that might come forward some time in the future when all the discussions and debates have come to an end. I have to say that that smacks of supreme political expediency.
	I also have to conclude that many Conservative Members—there are exceptions—do not seem interested in having a debate on these complex issues. Sadly, they are not interested in having a treaty that will make the European Union function more effectively. That is a great shame, because it seems likely that 10 new countries will join the European Union next year, and they will want to join a European Union that functions effectively in their own best interests. I suspect that that is what all citizens in all European countries want. That is what the debate in the Convention has been all about, and it is what the debate in the intergovernmental conference will be about as well.

Ann Winterton: The hon. Gentleman must be aware that the new countries that will come into Europe in May, if their referendums go well, have already signed up to the acquis communautaire. They have, therefore, signed up to Europe exactly as it is today. What would their reaction be, having worked very hard to meet the criteria and to bring their people along with them, if there were any major changes in what they had signed up to? Will they not be able to use their own veto if they do not like some of the ways in which the European constitution is developing?

Wayne David: The hon. Lady asks an interesting question. It is worth noting that we have seen the prospective accession countries play a full and active role in the deliberations of the Convention. Without exception, their contribution has been positive. They have not agreed with every point, but they have not disagreed with every point either. They have been very involved in the process. I believe that that involvement will continue, and as soon as those countries become full members of the European Union in May 2004, they will have a full legal involvement in the intergovernmental conference. I welcome that.
	It is also important to recognise that one interesting political configuration that is developing between the United Kingdom and many of the accession countries is a unity of purpose. I genuinely believe in the Government's vision of a Europe of people working together that is also a Europe of sovereign independent nations that decide to pool their sovereignty from time to time. Countries seeking to join the EU have the same vision.
	I know that the Poles—who have suffered under German domination in the past and, in the more recent past, under the Soviet Union—will not celebrate their new nationhood by accepting domination from Brussels. They realise that that is not what the European project is all about. They are proud of their independent sovereign status, and want to celebrate it within the European Union. They believe, rightly and perceptively, that the EU will preserve and enhance their new sense of identity. I think that much can be learned from countries in central and eastern Europe.
	I am glad that the hon. Member for Congleton (Ann Winterton) mentioned the attitude of the accession countries. It would be a huge shame if the House sent a negative message to other EU members and the accession countries, suggesting that some Members of Parliament wanted to destabilise the EU, provoke a crisis and make the Union dysfunctional. We must map out a way forward, sensibly and rationally.
	The Convention has brought a range of issues to the attention of the people of Europe. Although it has yet to reach definitive conclusions, I suspect that much will emerge that many of us will welcome. A few proposals may prove unacceptable, but we should recognise that such differences in opinion must be discussed by our representatives and the people of Europe, and that those discussions will be reflected in decisions made at the intergovernmental conference.
	The Government's commitment to parliamentary democracy means that we will have a full and honest debate, on the Floor of the House and elsewhere, on the merits of the final treaty change and the new so-called constitution that will emerge from the IGC. If we engage in a sensible, rational debate rather than one laced with unfortunate nationalism, we can have a new constitution that will take the enlarged European Union into a new era of peace and prosperity.

Richard Shepherd: The Government's position, and the Foreign Secretary's typically sophistic speech, have been characterised by a fear of seeking popular endorsement of what the Government have set out to do. The Foreign Secretary ably charted the huge changes that have taken place in the character of what we have come to call the European Union. What was once a common market is now a European union. He made much of his argument that huge constitutional changes had taken place in the Single European Act and the Maastricht treaty, and that at each stage Governments had rejected the idea of a referendum.
	Before the 1992 election I tabled a Bill demanding a referendum, and during the debates on the Maastricht treaty I tabled an amendment to the same effect. I believe that only through a referendum can the people to whom we are accountable express the oldest notion of democratic government: consent. We seek more than acquiescence. We seek consent—or, at least, that is what the Government should do.
	In a very revealing response during Question Time today, the Prime Minister said that people want a referendum because they want to paralyse the European Union. That was part of the Foreign Secretary's argument—that, in some way or other, it would derail the European Union. There is no open mind when the fear is that what they personally believe in and personally promote may be rejected if it is put to the British people. That is the dichotomy that faces the Government.
	I oppose these profound constitutional changes because they strike at the heart of our constitutional arrangements, bearing in mind that it took 200 years to bring about democratic and accountable government. A distinguished Member of Parliament left the Government Benches at the last election: Mr. Tony Benn. He used to ask the House, when looking at constitutions and Governments, what are their powers? Where did they get them from? In whose interest are they exercised? To whom are they accountable, and how do we get rid of them?
	Under our constitutional arrangements, we know how to get rid of a Government and how to change the law. The Convention's constitutional proposals do not amount merely to tidying arrangements. As my hon. Friend the Member for Stratford-on-Avon (Mr. Maples) said, they set out a constitution—it quacks like a duck, it walks like a duck, it is a constitution. We heard the sophistry of the Foreign Secretary, who says that it is nothing very much, but we heard that sophistry from Lord Hurd and from John Major. That sophistry has run through the debate on the European Union. As my right hon. Friend pointed out, each stage is a salami stage. We used to call it a ratchet. One starts at a very low base, and each stage is gained and then claimed as absolute.
	The Maastricht treaty sought something that this constitution could never countenance—no democracy could, in truth—and, similarly, these constitutional arrangements seek something that is, in the words of the Maastricht treaty, irrevocable and irreversible. Therefore, it is not a trivial matter. We know that the Convention is trying to overset deep constitutional principles of accountable government, whereby each generation may make provision for the matters and affairs of state that they regard as important, and legislation passed yesteryear can be gainsaid by the judgment of a new generation expressed through the ballot box.
	I come back to Tony Benn's questions. To whom are these institutions accountable? To whom is the Commission, the sole initiator of legislation, accountable? How does the citizen in Aldridge-Brownhills say, "I will not wear this Bill"? They cannot. In what way can they sack these people? They cannot. That is why the aim is to make the arrangements irrevocable and irreversible. The principle—that is what my right hon. Friend the Member for Devizes (Mr. Ancram), the shadow Foreign Secretary, was arguing for—is that this generation should give or withhold its consent.
	I am not a soothsayer, unlike the Prime Minister, who is now, ridiculously, trying to sell Europe. The former Minister for Europe went around the nation trying to meet Eurosceptics. I think that Kevin and Keith were the only two Eurosceptics whom he met when he did the Foreign Office bus trip around Britain to try to sell the euro. If we descend to those levels, things become farcical. The principle that is being enunciated is shared by those who deeply believe in the integration of Europe, and by those, such as me, who believe that this is an abnegation of democracy. That is the essence of this debate—not the fripperies of Ministers, who are playing around, as I have often seen Ministers play around before.
	The Government need to raise their game. Yesterday, the Prime Minister suggested that they were going to sell Europe. Heaven only knows, we have had nearly 20 years of being told that everything that happens in the European camp is for the benefit of this country. If that is so, let the British people announce it loud and clear in a referendum—but no, the Government fear it.
	The Liberal Democrats used to be in favour of referendums. I say that because I sought the support of their then leader, Lord Ashdown, for a referendum on Maastricht. He was for it, because the Liberal Democrats believed in these matters. However, we heard a very curious contribution from the hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore). He spoke of wee advances, wee this and wee that, as though it were just a little matter. It is not a little matter; it is the gathering together of all that forms a constitution.

Graham Allen: Is the hon. Gentleman not in fact making a case for including in the constitution provisions that would reassure him, many of his colleagues and many of those outside this place who are sceptical—thereby making it the sort of constitution that would command widespread support in the House—rather than merely calling for a referendum? To many on the Labour Benches, such a call looks like an excuse to stop a constitution, rather than to build a constitution that would give the hon. Gentleman the guarantees that he seeks.

Richard Shepherd: No—there is no conspiracy here. I am not trying to sell to the British people the idea that the loss of all these features of democratic and accountable government is a good. I believe in this institution, and in my nation as a democratic centre. I know how difficult it is to grasp what Governments do. Only last Wednesday, the Prime Minister told us about security and intelligence matters. How do we get him before a Committee? We know how difficult that is, but how difficult will it be to control Governments here, when all the apparatus is moved some 1,000 miles to a place where our voice does not prevail, and into the hands of other people? That is why many people in this country—with no ill will whatsoever to any continental power; many of them believe, as I do, in the comity of nations—feel that they should be able to express a view on being governed in an undemocratic, unaccountable form, whereby this House votes itself out of existence.
	This motion is really about a principle. The hon. Member for Nottingham, North (Mr. Allen) is right: we do not know what the outcome will be. But whatever it is, the people must be asked: is this right?

Andrew MacKinlay: I am very pleased at the news of the referendum in Poland. In my maiden speech in 1992, I spoke about my desire and hope for the enlargement of the European Union and of NATO to take in the various countries that are now indeed joining, such as Poland, Hungary and the Czech Republic. Their joining is important not just for them but for us, and it is the final closure of the awful events of 1939 and the disfigurement of Europe through the Yalta decisions.
	I also note that there is talk in the press of a Government reshuffle. I shall not be standing by my telephone this weekend, but I mention the fact because there have been six Ministers for Europe since my right hon. Friend the Prime Minister took office, which is too many. I certainly hope that he does not move my hon. Friend the Member for Rotherham (Mr. MacShane). I say that not because of the great affection that I have for my hon. Friend, but for the more important reason that it is not in the interests of the United Kingdom to keep changing our Ministers for Europe. I hope that that point will be noted.
	This debate has some resonance for me, and my observation that I will not be hanging around by the telephone this weekend is also relevant. My diary records a Liberal Democrat half-day debate in the House, when the Conservatives were in office, during Lord Ashdown's leadership of the Liberal Democrats. The Liberal Democrats called for a referendum on Europe. I thought that that was a rather good idea, as I do this afternoon. Later, I may intervene and supply the Hansard references.
	The right hon. Member for Bishop Auckland (Mr. Foster), then our Chief Whip, sent for me and said, "Andrew, I hope that you are not going to vote for this nonsense." I said that I was not only going to vote for it, but speak in favour of it—and I did. The House was like the Mary Celeste, with neither of the two major parties applying a Whip. Only a few Liberals and a few people like me spoke in favour, but we placed on record our view—still my view this afternoon, as an enthusiastic pro-European—that we needed to go out and sell Europe. It has all been one-way traffic, with the hon. Member for Stone (Mr. Cash) and my good friend with whom I disagree, the hon. Member for Rochford and Southend, East (Sir Teddy Taylor), making all the arguments. The other side has never been out, campaigning and evangelising the positive case for Europe. I believe that a referendum would help us pro-Europeans to concentrate our efforts and take the issue to the people. I therefore disagree with Ministers.
	The debate illustrates how Parliament can be brought into disrepute by the synthetic anger between the rival Front Benchers, with one side saying that the other side did not do this or that in office, and vice versa. I reminded my right hon. Friend the Foreign Secretary in the Foreign Affairs Committee yesterday that he and I campaigned for a referendum in the early 1970s after Harold Wilson had, as they say, had a fundamental negotiation of Common Market entry terms. My right hon. Friend was generous enough to concede that he voted no in that referendum. I voted yes and have continued to vote and argue in favour of European union ever since. I am pleased that my right hon. Friend is now in my camp.
	My diary also records the fact that in the debate on the Maastricht treaty the current Leader of the Opposition was pinned to the wall just outside the doors of the Chamber by a current member of the shadow Cabinet who did not want him to move in one particular direction. At the same time, another hon. Member, also in his place today, was pulling him by his tie in the other direction. Hence the confusion caused when the public see Front Benchers in each epoch altering their positions. Some hon. Members, including the hon. Member for Rochford and Southend, East and me, have at least been consistent and never taken the Major or the Blair shillings—though I was never offered them. The hon. Gentleman has been consistently opposed, and I have been consistently in favour of Europe.

Graham Allen: rose—

Andrew MacKinlay: I hope that my hon. Friend will not think me discourteous, but I am going to move on, as promised.
	We are prematurely working ourselves into a lather on the narrow issue of the Convention, because it has not yet been finalised. I believe that some of its proposals will have to be watered down because they are unlikely to be acceptable to 25 member states. Although it is not entirely satisfactory, I believe that we can reach agreement largely on the basis of existing arrangements that facilitate the enlarged Community.
	I said to the Foreign Secretary yesterday that it is a pity that we become obsessed with the term "president", which does not translate well into our language. You, Mr. Deputy Speaker, as our Chairman, would be a president in any other Assembly. I cannot think why, in an English translation of any subsequent treaty, we cannot think of an English word for "president" that would be an acceptable substitute to colleagues elsewhere. In my view, that would help our electorate to understand the issues, which is preferable to allowing the malevolent press to imply that we need another term to describe someone such as the President of the United States.

Denis MacShane: A small footnote to the process is my suggestion that the term "president" be changed to "chair" or "chairman". That now increasingly appears in the English text and I hope that it will be in the final text of the constitutional treaty.

Andrew MacKinlay: That is very good news, and I hope that other Front Benchers follow the initiative of the Minister for Europe by using that terminology time and again. If the Convention and subsequent treaty are agreed, we need to be clear about the functions of the new person, who effectively amounts to a Secretary-General, as understood in many international bodies.

Ian Davidson: May I suggest that we use the good Scottish term "convener"?

Andrew MacKinlay: I have made my point and I promised not to take long, so I cannot pursue that comment.
	I am pleased to place on the record my renewed enthusiasm for the European project, which I do not fear at all. However, it is in the best interests of Parliament that we take the people with us. We should have a reaffirmation by the British people of their support for our membership of Europe. It is logical and a matter of common sense, so we could persuade them. We should have the full consent of both Parliament and the people, not only because of the treaty on the constitution but because of the numerous treaties that have reinforced and deepened the project since the early 1970s. There will come a time—perhaps not this year, but in a few years' time—when we need to reaffirm our commitment to Europe.

Teddy Taylor: Time is short, so instead of the long and brilliant speech that I was going to make, I shall make a few brief points. The Foreign Secretary has not been in his place since he made his own speech and it is sad to see the Government treating the House of Commons with the same contempt as we have had year after year, whenever a European treaty has come forward.
	Every time a treaty is presented to us, we are told, "Don't worry, there's nothing in it. It is all in previous legislation and there's nothing new." Of course, on every occasion, the reverse has been true. The Single European Act is a perfect example: we were told that it was only a means of extending free trade within Europe, and we know that that was not the case. It is appalling that on this occasion, as on all previous ones, the Foreign Secretary simply concentrated on saying nasty things about delightful Conservatives, instead of saying something about the treaty.
	I hope that the Minister will answer a few questions when he winds up. Why do we need a European Foreign Minister? The proposal, set out in article 127, is something new. What will that Minister actually do? Where will his office be? For whom will he speak? We will also have a European ombudsman. Well, we have an ombudsman in Britain who does not appear to be a wonderful success. What will the European ombudsman do? To whom will he be responsible? How much will it cost? What is it all about? [Interruption.] There should be no confusion, because the provision is on page 21, article 148.
	Is article 159, about voluntary withdrawal from the EU, a load of the usual nonsense or is it real? A country that decides that it wants to leave the EU voluntarily has to come to an agreement, which could take about two years, and then it has to be approved by the Council, after the consent of the European Parliament has been obtained. I hope that the Minister will answer those straight questions, instead of blethering his usual nonsense. Will a nation have the right to withdraw or will that be totally subject to the Council and the Parliament?
	We should have a referendum, because people are fed up to the back teeth with the European Union, although that is probably why the Government are not having one. People were enthusiastic some years ago, but now most people are fed up. They point out that the EU costs us a great deal of money—£1.4 million every hour. I am sure that other hon. Members could think of better ways to spend that money. Most of the money we send to Europe is wasted on the most silly things. More than £1 billion will be spent this year on growing high tar tobacco in Greece. We do not want to consume that because it s bad for our health, but it is dumped on the third world and eastern Europe, and we can do nothing about it.
	People are annoyed about the instructions to the Government to change their policies and do daft things. For example, the winter fuel payment was introduced to help old people in cold weather. As the Minister will be aware—and he probably approves, being the sort of person that he is—the EU instructed us that we had to make that payment to people in the overseas territories of the EU, including those in Guadalupe, Martinique and other places with year-round sunshine. That costs the taxpayer £10 million a year—on the Government's figures—but what can we do about it?
	We find that people are fed up to the back teeth with what is being done to the fishing industry, but again Parliament is basically useless.
	Whenever the powers of the EU are extended, the Government say that we must accept it because of the advantage to our trade. I hope that the Minister will read the document entitled "Global Britain Briefing Note", the latest edition of which was published this week. It makes the simple point that, although the single market was established to help our trade, exports to the EU from the US—which had to overcome the hurdle of not being in the EU—grew twice as fast as those from France and Germany. It also states that Japanese exports to the single market grew 27 per cent. faster than French and German exports to the same destination.
	My final point concerns a matter that I hope that the Government will consider. Why have we eliminated a number of matters from the treaties that appear to me to be rather important but which unfortunately seem to have been treated as of no significance? The draft constitution states:
	"Member States shall actively and unreservedly support the Union's common foreign and security policy".
	What does that mean for a democratic Parliament and Government? What is the obligation that means that we must support such policies "unreservedly"?
	The draft also states that the constitution
	"shall have primacy over the law of the Member States."
	That is not entirely new, but what does it mean?
	I have 10 seconds left, so my final point for the Minister is to ask him what is meant when article 11.19 on page 5 states that nobody will be removed by any member state when there is a risk that that person could be subject to the death penalty. Does that mean that we cannot send a person out of our country who is here illegally if the result will be that he is sent to a country that has the death penalty?
	I could offer many other examples, but unfortunately do not have time to do so. My point is that the draft constitution contains a huge number of provisions that are major extensions of European power that would undermine our democracy in important ways. It is time that the Government woke up to the fact, and gave the people the right to say whether they want to proceed with the proposals, or not.

William Cash: This debate is about the freedom of the voters whom we represent. It is their Parliament. It should be their referendum, which would be authorised by Parliament, recognising the people's right of consent. The motion is not about the merits or demerits of the EU, and neither is it about being in or out. It is not anti-European to be pro-democracy.
	Above all, the debate is about the voters, their families, their children and their daily lives. It is about what took young men to war—in the past and recently—to fight for the freedom of their country. It is about whom the voters choose to govern them, and how that is to be done. Ours is the patriotic case in the national interest—national, that is, not nationalistic.
	The Prime Minister claimed the patriotic ground yesterday, and the Foreign Secretary did so again today, yet he refuses a referendum on how we are to be governed. That is because he knows that he will not win, and he dares not face the voters with the truth. The Prime Minister's version of patriotism is the last refuge of the loser.
	The "Oxford English Dictionary" defines patriotism as the quality possessed by people who are devoted to their country, and who are ready to support or defend it. The proposed constitution cynically turns truth on its head, and freedom with it. It is the ultimate betrayal of the nation.
	We have heard some notable contributions, among them those from my right hon. Friend the Member for Devizes (Mr. Ancram), the shadow Foreign Secretary, and from my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd). We insist that there must be a referendum if the constitutional treaty is agreed by the Government. That referendum must be held before the treaty is brought to Parliament.
	This is an exceptional case for an exceptional treaty. It is exceptional because the Government have agreed with the principle of a European constitution, without a shred of legal, constitutional or political authority. The Government will use their Whips to drive the constitution through the House. No Member of Parliament, including the Prime Minister, has the right to undermine the rights of the voters of this country to decide their own form of Government, or the right to usurp the authority of the House of Commons. The decision must be the decision of the voters, in a fair referendum with a fair question based on full information.
	The Government of no member state has so far objected in principle to the proposed constitution. It is therefore right to assume that it will go through the intergovernmental conference. Then the voters must have their say, and that say must be based on an explanation about the constitutional and legal implications in a White Paper, like the one issued by the Labour Government in 1967 even before European government became an issue. If then, why not now? I have repeatedly asked the Prime Minister on the Floor of the House for such a White Paper, and he has refused point blank. He does not want the voters—our constituents—to know the truth: that is the reality. The voters do not believe a word he says, as my right hon. Friend the Leader of the Opposition stated last week.
	The Government call the constitution a tidying-up exercise and say that it is not a major constitutional shift. Yet we do not know what constitutional arrangements the document will contain. Who do they think they are kidding? They clearly have not read the constitution, so let me outline what it says.

Graham Allen: Will the hon. Gentleman give way?

William Cash: I am afraid that I cannot; the Government took up a great deal of our time.
	We should note the words of the constitution. The opening words are:
	"Reflecting the will of the citizens and the States of Europe to build a common future".
	Notice the distinction drawn between the will of the citizens and the will of the states: if there is no referendum, there is no will, and no connection with the citizen. It goes on, crucially:
	"this constitution establishes the European Union",
	adding reference to the competences to be conferred. It then says: "The constitution,"—that comma may be the biggest constitutional comma in modern European history—
	"shall have primacy over the law of the Member States."
	That means this Parliament. That principle, with legal personality and exclusive and shared competences in the field of government, and the protocol that reduces national parliaments to mere involvement, steal the right of every voter in this country to govern themselves through their elected representatives.
	John Bruton, former Prime Minister of Ireland and now a member of the Praesidium, has said, in effect, that the national parliaments are wasting their time and had better come to terms with it. Even apart from the other components of further integration, the Convention moves the strategic plan from theory to constitutional politics. It is no reply to say that the constitution states:
	"The Union shall respect the national identities of its Member States inherent in their fundamental structures, political and constitutional".
	Identity is neither law nor constitution.
	The constitution will repeal all existing treaties. Contrary to the Government's amendment to our motion, it goes far beyond any existing treaty, both in content and in principle. It incarnates a new treaty. It turns the European Court into the supreme court of Europe, adjudicating over the European constitution, which will absorb our courts and our parliament. The Government amendment breathtakingly claims that the proposed constitution does
	"not involve any fundamental change in the relationship between the EU and its Member States".
	The Minister for Europe said as much to me in answer to a parliamentary question. It is simply untrue.
	The only justifiable means of giving our voters a free choice on such a vital issue must be to give them their say in a referendum. The onus is on those who are against the referendum to justify their refusal to allow the people to have their say. If the treaty went straight into a Bill under the European Communities Act 1972, who imagines that there would not be a programme motion and a three-line Whip? At the very least, the 1972 Act would need an express and unambiguous amendment to protect the voters' rights to govern themselves.
	On 28 May, in The Times, the Foreign Secretary stated that
	"the new European Constitution is also something Britain supports".
	How on earth does he know? It was not in the Labour manifesto. Nor was it authorised by the Laeken declaration, as Lord Tomlinson indicated in the Convention the other day. The Foreign Secretary continued:
	"It will create a stable rule book setting out clearly the primacy of nation states."
	That is pure nonsense.
	To bring in the constitution through the 1972 Act, without a referendum, would be constitutional suicide, establishing by reverse takeover a constitutional sovereignty higher than that of Parliament itself. By any standards, that is a greater constitutional shift than any in recent centuries, even going back as far as 1688. In 1649, there was regicide; now, it would be suicide.
	I have five constitutional tests for the Prime Minister, so that he can explain the proposed new constitution to the British people in plain English. First, what does the constitution really do? What does it tidy up, and how? What do the Government mean by "substantive" and "fundamental"?
	Secondly, how is our national primacy to be preserved under the constitution? Thirdly, how much control will our Parliament retain, and how? Fourthly, why will not the Prime Minister give the British people a White Paper? Fifthly, how can he expect the voters to trust him without a referendum?
	The Prime Minister has conceded a referendum on the principle of the loss of sovereignty involved in the euro yet, like a Russian doll, that inner principle is separate from, but encased in, the greater principle of the constitution itself, under the constitutional treaty. If one deserves a referendum so, irrefutably, must the other. The truth is that the Prime Minister refuses to let British voters decide because he knows that they will not give him the answer he wants.
	Who governs us, and how? The difference between the Opposition and the Government is that we trust the British people and they do not. I commend the motion to the House.

Denis MacShane: This has been a good debate. Unfortunately, my right hon. Friend the Leader of the House did not announce it last Thursday, so hon. Members did not know about it until Tuesday morning. As the debate has had to be compressed, I shall not take interventions.
	The debate has reflected the concern of the House, as is right. We have intensively debated the Convention both in Westminster Hall and in this Chamber. The European Scrutiny Committee has considered it. Next Tuesday, 17 June, a parliamentary seminar on the Convention on the Future of Europe will be held in the Foreign Office, and I invite all hon. Members to attend. I can confirm that once the Convention text has been published, we shall find a day in Government time for the House to debate these matters before it rises. Neither the Government nor I have any problem about debating them as thoroughly as possible.
	We have heard some good contributions, especially from my hon. Friends the Members for Leicester, East (Keith Vaz) and for Caerphilly (Mr. David). My hon. Friend the Member for Caerphilly, like my hon. Friend the Member for Thurrock (Andrew Mackinlay), mentioned Poland where, on Sunday, we heard a strong yes to Europe.
	It is interesting that only Labour Members have mentioned the historic decision of the Poles to vote positively for Europe. The Poles are working hard in the Convention. They look forward to a new constitutional treaty because the Europe that they want to join cannot be run on the existing rules, which may satisfy the Opposition but do not satisfy the incoming member states.
	The hon. Member for Aldridge-Brownhills (Mr. Shepherd) made a passionate statement about the strength of the House, and I hope to return to his speech before I conclude.
	The hon. Member for Rochford and Southend, East (Sir Teddy Taylor) said that an EU ombudsman had been sneaked into the new Convention treaty. In fact, that institution has been part of the EU since 1991, and was voted on by the House. Similarly, language about loyal co-operation is also part of the EU. I realise that loyal co-operation is a concept unknown to the Opposition, but it is generally helpful when nation states have to work together.
	The hon. Member for Stone (Mr. Cash), who has just spoken, looked deeply shocked when he heard that his party's policy in favour of a referendum was only six months old—of course it has been his policy, and that of the leader of the Conservative party, for more than a decade. It was not ever thus: the hon. Member for Stone, who was then the hon. Member for Stafford, told the House:
	"I have for many years been a supporter of the European Community in the broadest possible terms . . . We tend to exaggerate the dangers of majority voting."—[Official Report, 23 April 1986; Vol. 96, c. 378.]
	That was in 1986, but at some stage the hon. Gentleman saw the light.
	The Opposition speeches did not contain much about the referendum. The hon. Member for Stratford-on-Avon (Mr. Maples) made a very good speech but did not mention the referendum once, and yet the Order Paper states that the debate is about the referendum. He, of course, was the Conservative party's original nominee to sit on the Convention but was dismissed—cast aside, because he is too sensible on Europe. Similarly, I regret the fact that it is not my opposite number, the shadow Minister for Europe, who is speaking in the debate, but the hon. Member for Stone, who has usurped his task and returned to the Front Bench to give us the benefit of his views on Europe.
	This is about a return to the Conservative party of the 1930s, because it is about tomorrow's anti-European propaganda stunt, organised by the Rothermere press. I am a great fan of the Rothermere press. The Daily Mail has been telling us that under the constitutional treaty, we will all have to drive on the right, Napoleon will replace Nelson on top of Nelson's column, and trial by jury will be abused. What else have we got? Oh yes, that under compulsory metrication, shopkeepers will be put
	"in jail for three years for daring to sell potatoes by the pound".
	I am a great fan of the Daily Mail, but I prefer its solid and sensible articles. Among those that I have read recently were, "Mission Impossible: How a squirrrel cracked the toughest problem to reach a prize of nuts" and, "After weeks of research in hundreds of shops we present the best bras in Britain—Bra none!" But I seriously warn the House that when Rothermere editors turn their attention to Europe, they often get it wrong. Those of us who know our history remember the isolationism of the Rothermere press in the 1930s, their slavish admiration of Neville Chamberlain and his description of Europe as a faraway country of which we know nothing.

Graham Allen: Will my hon. Friend give way?

Denis MacShane: I will not, I am afraid, because I really do not have time.
	That demand to isolate us from Europe has been reiterated today, and is again in front of the British people. When the Leader of the Opposition tells newspapers:
	"The public is ready to go for Britain repatriating its powers from the EU, which could eventually mean pulling out",
	we should take him at his word. He told the Irish Times:
	"I welcome everything that moves us closer to the point where we can say 'No' on Europe."
	That is why he is calling for this referendum; to be fair, he did the same in 1992.
	The hon. Member for Stone, too, did the same in a Bill put before the House in 1996. He also did it for the Amsterdam treaty and the Nice treaty. He has taken every opportunity to insist on a referendum, because he wants to say no to Europe; he wants us to withdraw from Europe. The hon. Gentleman told the Sunday Telegraph:
	"We would prefer it if the EU did not exist".
	He suffers, as do so many Conservative Members, from irritable vowel syndrome: he and his leader cannot say E and U without feeling very disturbed and ill indeed.
	However, the hon. Gentleman has always been consistent. He told the Bruges group:
	"We have to get down to the serious business within the Conservative party of recognising that the arguments that those like myself have been presenting, have got to be adopted by the Conservative party as a whole."
	I advise him not to worry; his party is nearly there. As a Conservative MEP, Roger Helmer, said in his newsletter, "Straight Talking", last month:
	"It is not yet party policy to withdraw from the EU. But it is, perhaps, an idea whose time is coming."
	That is the golden thread that weaves through all the Opposition speeches that we heard this afternoon, and their incessant clamour for a referendum.
	I genuinely do not see how anyone can call for a referendum on a proposition that is not even before the British people. The Conservative party and the Rothermere press do not want a referendum to find out what the British people want; they want a referendum to enable them to say no to Europe.
	Their slogan is "No to Europe. Europe, Europe, Europe: out, out, out." They are saying that, while the people of Poland and our other great friends and allies in central and eastern Europe and the Baltic states are saying yes to Europe. The hon. Member for Stone wants every member of his party to sew on a nametape to identify them as saying yes to a referendum and no to Europe. That represents traditional populist politics, aimed at parliamentary democracy. As Walter Bagehot rightly said:
	"The distinguishing quality of Parliamentary Government is, that in each stage of a public transaction there is a discussion; that the public assist at this discussion; that it can, through Parliament, turn out an administration which is not doing as it likes, and can put in an administration which will do as it likes."
	The Conservative party is calling for the power and authority of this Parliament to be handed over to the Rothermere press and its populist plebiscites of the 1930s.
	I say to the House, as I have said before, that the people will decide, just as they decided in 1983, 1997 and 2001 when they rejected the anti-European party. People and Parliament will decide, not the press and those in the Conservative party who call for us to withdraw from Europe. I ask my hon. Friends to vote for Parliament and the people of Britain, and to reject the Opposition motion.

Question put, That the original words stand part of the Question:—
	The House divided: Ayes 155, Noes 293.

Question accordingly negatived.
	Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments):—
	The House divided: Ayes 283, Noes 178.

Question accordingly agreed to.
	Mr. Deputy Speaker forthwith declared the main Question, as amended, to be agreed to.
	Resolved,
	That this House notes that previous governments rejected referendums on previous constitutional treaties such as the Single European Act and Maastricht, both of which involved greater change than the draft Treaty proposed by the Convention on the Future of Europe; believes that since the proposals of the Convention do not involve any fundamental change in the relationship between the EU and its Member States, there is no case for a referendum; and notes that any proposals from the Convention are a matter for unanimous agreement by an Inter-Governmental Conference, and then endorsement by the Parliament of the United Kingdom.

Post Office Card Accounts

Mr. Deputy Speaker: We now come to the debate on Post Office card accounts. Mr. Speaker has selected the amendment in the name of the Prime Minister.

Oliver Heald: I beg to move,
	That this House believes that those Post Office customers who wish to continue receiving their benefits, pension payments and tax credits through the Post Office, following the introduction of ACT in April, should be allowed to do so through a post office card account opened at the counter of a post office or sub-post office; further believes that customers should be offered a genuine choice between the options available, including a post office card account; supports the National Federation of Subpostmasters' call that there should be no administrative obstacles to customers opening a post office card account; notes the importance of post office card accounts to the future financial viability of sub-post offices; and calls upon the Government to ensure that there is a level playing field in the marketing, promotion and advertising of the banking options from all Government departments and agencies, including the Department for Work and Pensions, the Inland Revenue and the Veterans Agency.
	Hon. Members will note that the text of the motion is identical to early-day motion 572 in the name of the hon. Member for Ochil (Mr. O'Neill). I pay tribute to him for his work and to other members of the Select Committee on Trade and Industry as they conduct their inquiry. Nearly 400 hon. Members from all parties, including more than 170 Labour Members, supported the early-day motion and I have high hopes that the House will agree to our motion today.
	The support of nearly 400 Members highlights the seriousness of the issue for millions of our constituents throughout the country. It is right to record that those affected include many of the most vulnerable people in our society—the elderly and infirm and those who rely on what they receive each week at the post office to feed and clothe themselves and their families.
	In the past few months, I have received hundreds of letters from people who are desperately worried about the changes. Many elderly constituents are simply not used to the sort of technology that the Government are forcing on them through the changes. Many are not familiar with the world of the PIN number or the plastic card and run their finances on a cash basis. Doubtless that is why so many have continued to collect their pensions at the post office.

Steve Webb: What is the hon. Gentleman's position on pension books? The sort of pensioner whom he describes likes the pension book system and does not understand why it should change. The motion understandably covers Post Office card accounts, but will he clarify whether Conservative Members believe that pensioners should retain the right to collect their pensions with a pension book?

Oliver Heald: We believe that pensioners should be able to collect their pensions by that method or through a simple Post Office card account. Pensioners and other vulnerable people should be able to continue to do as they have been doing—go to their post office, receive the cash and manage their finances in the way in which they wish. The answer to the question is therefore yes, but I stress that the Post Office card account could have been good, but it has been ruined by Government incompetence.
	It is clear from evidence to the Select Committee on Trade and Industry that, to many elderly people, it appears as though the scheme is aimed at 86-year-olds but devised by 26-year-olds. It is not appropriate to the audience at which it is directed. Last week, at the Select Committee hearing, the Chairman asked the chief executive of Royal Mail whether it would be unreasonable to direct most of the blame at the Department for Work and Pensions for devising the most awkward and inconvenient way of setting up a Post Office card account. Mr. Mills, the chief executive, replied:
	"It is not too unreasonable, Chairman."
	And no wonder. If we look at the problems involved in opening an account, we see that the complex system put in place by the Government—not the Post Office—has led to difficulties and confusion for hundreds of thousands of people.
	One pensioner wrote to me to describe what had happened when she tried to open a Post Office card account, saying:
	"It was 25 times of trying before I got through to the number . . . As a worker in the Citizens Advice Bureau I am meeting many elderly pensioners who feel very threatened by the whole process . . . Why can't the government have application forms available in Post Offices?"
	Why, indeed? The answer given to the Select Committee on this point by the Under-Secretary of State for Work and Pensions, the hon. Member for Croydon, North (Malcolm Wicks), was:
	"If we just had application forms hanging round the Post Office I can see problems in that this is an account system, the Post Office Card Account, designed just for our customers, the Department for Work and Pensions customers . . . It is not for the general citizenry".
	That shows just how out of touch the Minister is, because every person in the country who is over pension age is entitled to open one of these accounts, as are all those with children. Surely that is sufficient justification for having simple forms available in the post office. After all, driving licence application forms are only for customers of the Driver and Vehicle Licensing Agency, but they are available in post offices. Passport application forms are only for customers of the Passport Agency, but they too are available in post offices. Is the Minister seriously suggesting that the millions of customers of the Department for Work and Pensions who receive cash at the post office do not deserve the same consideration?

Ronnie Campbell: In my constituency, the last Crown post office in south-east Northumberland has closed. I asked the Post Office to keep it open for two years while the Post Office card account got off the ground because, although a lot of people were signing up, there were not enough. Many people were finding it complicated, as the hon. Gentleman rightly pointed out, but, given time, there would have been enough of them. The Post Office denied me those two years, and closed the post office last week. Why should the people of Blyth be loyal to the Post Office, when the Post Office has not been loyal to them?

Oliver Heald: The hon. Gentleman makes an excellent point. As a result of these changes, there will be a drop of something like 40 per cent. in business in post offices across the country, according to the sub-postmasters. The effect of that in loss of footfall will be that many post office products will not be purchased. Furthermore, in a small community, it will not just be the post office that suffers but all the other small shops that rely on people purchasing things after they have been to the post office to obtain their money.

Kate Hoey: I agree totally that pensioners should be able to use their pension books while they continue to draw their pension. That is basic justice. Does the hon. Gentleman share the concern of pensioners in my constituency about the security issues relating to the card account? Many of them walk to the post office and, I am afraid that, in constituencies such as mine, people are mugged for all sorts of things. They are worried that they will be mugged, that their card will be taken off them and that they will be forced to give the mugger their PIN number. Many elderly people are wary of the security problems involved in the scheme. Does the hon. Gentleman agree that the Government should now say that, whatever the situation, if someone wants to keep on using their pension book, they should be able to do so?

Oliver Heald: I agree with the hon. Lady. Many people who collect their money at the post office are elderly and are not going to be collecting their money for many more years, to be frank. Some of the people who have written to me are in their 90s, and even in these days of good public health, they will be using these services for only a short period. To them, however, it matters greatly that they are able to do so. To have a massive change inflicted upon them at that age really is wrong.
	It is difficult to open a Post Office card account. One would have thought that the Government would have made a massive effort to explain the options and to help customers. In fact, many letters went out to customers that did not even refer to the option of a Post Office card account. The advertising started only after the scheme had been implemented.

Nick Gibb: On Friday a sub-postmaster in my constituency told me of complaints that he had received from customers about obstacles that had been placed in the way of opening current accounts. It is hugely burdensome for pensioners to go to all the trouble of opening accounts simply to draw their pensions from the post office, and it is doubly burdensome when obstacles are deliberately placed in their way.

Oliver Heald: Indeed. A pensioner wrote to me saying that, having got through to the helpline, she was subjected to
	"a tirade in favour of bank accounts but I stated that I wanted to keep getting paid in my local post office. The girl on the phone kept telling me it was much more convenient to have it at a bank".
	An 85-year old pensioner from Doncaster wrote to me at the end of last month to say:
	"A young friend . . . phoned to get more information regarding her child allowance . . . During her call, she was very heavily pressed to use the bank and not the Post Office."

Michael Weir: I agree with everything that the hon. Gentleman is saying, but is it not even worse than that? In many areas, there is no bank branch to use, because the major banks have been implementing a branch closure programme for at least 10 years. As was pointed out by the hon. Member for Vauxhall (Kate Hoey), the only way of obtaining money from a bank may be to use a "hole in the wall", and there are serious problems with a number of those machines.

Oliver Heald: That just goes to show that the system has not been thought through adequately.
	The system is complex, and it was not advertised properly. Individuals are being pushed away from the Post Office card account. [Interruption.] The Minister shakes his head and says "No, no." Let us consider whether there might be a reason for what is happening. When he was questioned last week, the Minister admitted that Post Office card accounts cost the Department for Work and Pensions money, and that it had been funded for only 3 million of all the millions of customers. He said that if that was reduced any further, he would have to go cap in hand and
	"open up discussions with our good friends in the Treasury".
	There we have it. The evidence on the ground and the money that is available point in the same direction: the Department is dissuading customers from using Post Office card accounts. Is it any wonder that 800,000 of the 2.5 million who have been written to so far have failed to respond?

Geraldine Smith: In fact, a great many people want their pensions to be paid through bank accounts. We must accept that things move on. I acknowledge that there have been problems in the past for people who have wanted to have Post Office cards, but a lot of work has been done to resolve those problems. In the window of my constituency office is a massive poster from the Post Office telling people that they can still collect their pensions and have a Post Office card. I have leaflets, and I have tried phoning the hotline—

Mr. Deputy Speaker: Order. The hon. Lady cannot make a speech during an intervention.

Oliver Heald: Like me, the hon. Member for Vauxhall (Kate Hoey) and many others, the hon. Member for Morecambe and Lunesdale (Geraldine Smith) signed the early-day motion. We want a genuine choice, and we want it to be easy to open a Post Office card account. I hope that she will vote with us tonight, because the wording of the motion is exactly the same as that of the early-day motion that she signed.

Geraldine Smith: Will the hon. Gentleman give way?

Oliver Heald: I had better make some progress. There is very little time.

Roger Gale: My hon. Friend said that this was cost-driven. Has he considered the social cost of the damage that will be done not just to post offices but to individuals? Those of us whose constituencies contain a large number of elderly people know that the post office is often where they meet their friends just once a week. This Government could not care less about that, and are trying to take it away.

Oliver Heald: That point has been made to me in letters from people all over the country. We are talking about a social loss. It is also wrong to impose on vulnerable people uncertainty about something that is so important to them. They rely on the money that they collect, week by week, and to impose on them a confusing system that they do not understand is just plain wrong.
	Even those who can open a Post Office card account may not be able to use it all the time. Many of those who use order books get their carer to collect their pensions if they are not well. However, they may have to use more than one carer. That is fine under the current system but the Post Office card account will allow only one person to be nominated for that purpose. How will that affect the pensioner from Oldham who wrote to me? That pensioner stated:
	"I have no relatives, and most of my friends have died. If I am ill . . . I may be allocated a home carer who can collect my retirement pension . . . Each time this has happened, it has been a different home carer . . . I have been told that unless I can nominate someone to act as agent for me, should I not be able to collect my pension . . . I shall simply get no money . . . No thought has been given to the plight of older people, or younger disabled people, who simply have no-one to appoint".
	Another pensioner from Kent wrote:
	"I understand that the carer will also be given a separate PIN . . . In my local Post Office I see home carers collect for 3 to 4 pensioners at one time . . . If they have to use PINs this means memorising several at one time, and as they do this job five days a week, they will have to know and use something like 20 PINs. Some memory needed there! Has any thought been given to this situation?"
	Surely, the Government should be able to explain how those difficulties are to be surmounted. What is the answer? I hope that the Minister will address those points.
	The Government need to be clearer on what is happening with the key pads that have been installed. Are they to be ripped out or modified? What is to happen to all 38,000 of them and how is it that the Minister's Department allowed those problems to arise in the first place?
	The Minister for E-Commerce and Competitiveness told the Select Committee last week that the Post Office was looking to develop new technology for secure alternatives to PIN pads. What is the timetable for its introduction? Is it separate from the exceptions service for those who are simply unable to open or use any of the direct payment options available, including Post Office card accounts? The National Federation of Sub-Postmasters has pointed out that no details of an exceptions service have been released and there is no mention of it in any of the publicity. The federation states that that causes concern and uncertainty for those claimants who cannot manage on the options available.
	I have raised the exceptions service on a number of occasions in the House but the answers that I have received have not shed much light on the position. At questions on Monday, I asked the Secretary of State whether he would say what criteria would qualify a person for the exceptions service. He replied:
	"we shall consult closely . . . with representative groups of older people, disabled people and others to ensure that those criteria are sensible and meet people's needs".—[Official Report, 9 June 2003; Vol. 406, c. 390.]
	With the greatest possible respect to him, that was a non-answer. Saying that the criteria will be "sensible" and that they will "meet people's needs" does not tell us what they are. Many customers simply do not know about the exceptions service because they have not been told. They do not know that they can keep their order books for up to two years while the service is being developed.
	When the Under-Secretary of State for Work and Pensions, the hon. Member for Croydon, North, was pressed to explain whether people are aware of that, what was his reply to the Select Committee? He said:
	"I cannot, to be straight with you, guarantee that they are sufficiently aware. I think some are but I think there is still some confusion."
	One would think that it was a pretty big issue and should be dealt with urgently. The question arises, what were the Government going to do to let people know? The answer given by the Under-Secretary was:
	"In every local radio interview, I do stress that. I say 'Look: the advice to people at the moment is, do not panic'".
	It is very Corporal Jones but we were looking for something a bit more Captain Mainwaring, not least because the Government intend to spend two years developing the exceptions service when they already know how it is going to work.
	The Under-Secretary told the Select Committee last week that the exceptions service would "almost certainly" be a cheque through the post. It is hardly rocket science. It really is "Dad's Army" at the DWP. Although it knows what form the service will take, it has not even asked, consulted or told the Post Office about it yet, as the chief executive confirmed last week.
	Of course, it is not even clear whom the exceptions service is going to be for. Last Tuesday, the Under-Secretary told me that it would be for those who
	"genuinely are unable to manage an account". —[Official Report, 3 June 2003; Vol. 406, c. 50W]
	However, a day later, at the Select Committee, he described the exceptions service as applying
	"where people . . . feel that none of the existing accounts including the Post Office card account was suitable".
	So who decides and on what basis? Will the service be available to customers who feel that none of the account-based options is suitable, or do they need to be assessed by the DWP as medically unable? It is a vital question, because the people concerned are elderly customers and those suffering from blindness, Alzheimer's disease, severe arthritis, autism and other serious conditions. They deserve answers and should not be left in the dark.

Bob Spink: Could we also address the question of how many the exception will apply to? We know that 40 per cent. of the people who have been asked by the Government to transfer to the new system have not yet done so. What will happen to them? Will the exception apply to 40 per cent. of the people?

Oliver Heald: We simply do not know. I have asked the question and been told that the number is very small. I have asked what will happen to the nearly 40 per cent. who have not responded to the letters of invitation when the order books are phased out. The answer comes back, "We will contact them again," but there is no clarity as to when the exceptions service will be introduced, whom it will apply to and what it is about. We do not even know whether it is the same thing as the technological changes that the Minister for E-Commerce and Competitiveness talked about.

Chris Grayling: Of course, there is another group who will be affected by this. Those who suffer from learning disabilities will certainly be unable to respond to the Government's letters and invitations, and they are probably not following the Under-Secretary very closely on local radio. They will also lose out.

Oliver Heald: Of course, the sad thing about the point that my hon. Friend makes so aptly is that many people—parents, many professionals and even the individuals concerned—have spent years encouraging a little independence and the ability to manage one's own affairs. Then the Government come along with their flashy new system and suddenly, people are supposed to say, "Oh well, a carer can do it for me." That is against the whole trend of our efforts to consider and help disabled people.
	The Under-Secretary really must answer the pensioner in Kent, who says:
	"I am used to going to the Post Office each week and getting cash with no problems and like many of our generation am not happy with PIN numbers and plastic cards, but it seems there will be no alternative."
	That pensioner feels that none of the options on offer is satisfactory. In those circumstances, if she feels—to paraphrase the Under-Secretary—that account-based systems are unsuitable, will she be able to use the exceptions service?
	The effect of all this is likely to be fewer customers using local post offices to collect their money, or the other services that they provide.

David Kidney: In such instances, what is wrong with people having a bank account and cashing cheques at a time and a post office of their choice?

Oliver Heald: Nothing at all. There is no argument between the hon. Gentleman and ourselves; indeed, he signed the early-day motion that relates to the motion that we are proposing today. All that we ask for is an easy system for applying for a post office card account and proper information—points that are in the motion, and with which he agrees. We are all for choice and for people being able to do exactly what they wish to do, and they should have the option of a Post Office card account and easy access to it.
	In small communities, neighbouring shops will also suffer. This is a deliberate policy of the Government, which will damage communities throughout the country as post offices are forced to close. It is vital that we save our local post offices.
	I have placed before the House practical examples from real people. I have included many quotations from letters that I have received, and I hope that the Government respond positively during this debate to the problems highlighted by evidence from some of the most vulnerable people in our society. Those people deserve better than they have got and better than they are getting, and it is time that the Government listened to their concerns.
	I invite not only my right hon. and hon. Friends but the two independent Members, the three Social Democratic and Labour party Members, the four Democratic Unionist party Members, the four Ulster Unionist party Members, the four Plaid Cymru Members, the five Scottish National party Members, the 51 Liberal Democrat Members and the 175 Labour Members—all of whom have already supported this motion as an early-day motion—to demonstrate their continuing support in the Lobby this evening. I commend the motion to the House.

Malcolm Wicks: I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
	"recognises that more people than ever are choosing to receive their benefits and pensions straight into accounts and welcomes the significant steps the Government has taken to modernise the payment of benefits and enable customers to choose the account that suits them best; welcomes the introduction of the Post Office Card Account as one important option; further recognises the major benefits the move to Direct Payment will have in cutting fraud and crime and the important role it will play in extending financial inclusion; recognises the importance of this programme, which alongside other initiatives such as Pension Credit, increases opportunities for elderly people; applauds the Post Office and the cross-departmental programme that ensured the new system was delivered on time at the start of April; and believes that the move to Direct Payment is central to the future of a successful modern Post Office."
	I am pleased to move the amendment standing in the name of my right hon. Friend the Prime Minister and other ministerial colleagues. I welcome the opportunity afforded by the debate. Changes to the way in which we pay benefits and pensions will ensure a more modern, efficient and reliable service that will increase customer choice, provide better value for the taxpayer, cut fraud and boost financial inclusion.
	May I say at the outset that I recognise that legitimate worries and concerns will always arise when changes of this sort are proposed and implemented? However, the whole House will agree that there is a difference between debating legitimate concerns and playing politics with the issues by going for inaccurate scaremongering. In view of the vulnerability of some of the people described by the hon. Member for North-East Hertfordshire (Mr. Heald), we all have duties to attend to in the House and in our constituencies on this matter.

Gregory Barker: The Minister's claim that changes in payment will give rise to more choice and modernisation will ring very hollow indeed among to my constituents in Old Town in Bexhill, whose post office is closing. The branch closure letter expressly states as one of the reasons for closure:
	"Benefits are paid with the introduction of Direct Payment into accounts."
	My constituents, many of whom are elderly and frail, will be left without a local post office and will have to pay to travel by taxi to collect their pension elsewhere, which is a poor deal for them.

Malcolm Wicks: I hope to address some of those concerns during my speech. However, the present Government, unlike the previous Conservative Government, have invested record levels in the post office network—[Interruption.] I have already said that I am not interested in playing politics with the issues, so I shall not compare the record number of post office closures under the previous Government with what is occurring now. We are going for record investment, including £450 million in the rural post office network. After the debate, I would be happy to compare records, if that is the game that the hon. Member for Bexhill and Battle (Gregory Barker) wants to play.

Michael Weir: The Minister refers to changing over the system, but the Government amendment ends by saying that
	"the move to Direct Payment is central to the future of a successful modern Post Office".
	How can that be, if it is estimated that 40 per cent. of income from the Post Office will disappear? If it is true, why will the Minister not market the Post Office card account as the main means of moving towards such direct payment?

Malcolm Wicks: We added that sentence to our amendment mainly because we view the future of the Post Office, in part, as a modern banking system, through which people exercising choices can secure money for their pensions or benefits. However, I shall return to that later.

Geraldine Smith: The Minister refers to the previous Government. Is he aware that Morecambe nearly lost a Crown post office when the Conservative Government tried to privatise the Post Office? Only campaigns by the Labour party and residents saved our main Crown office.

Malcolm Wicks: I am grateful to my hon. Friend, but I hope that we can all unite on a programme that includes direct payment modernisation, which will ensure the future of the post office network. We all share that objective in common. I hope that I can now make some progress and take interventions as they arise.
	It is important to understand what has been happening. People were already voting with their feet. The number of customers paid by direct payment into a bank or building society account increased by nearly 1 million last year. Six out of 10 of the new cohort of pensioners and people retiring asked for their pension to be paid into a bank or building society account, and six out of 10 new child benefit payments are made through direct payment. Those are important trends.

Oliver Heald: If everything is working out so swimmingly with people being paid their money directly to their bank and building society accounts, why force people who do not want to do that into the new system? Many of them have spent their whole lives managing with cash. What is the point?

Malcolm Wicks: We are not forcing anyone. The whole point—

Peter Luff: Yes, you are.

Malcolm Wicks: The whole point is about giving people choice. If we did not make this change, the post office network would be bled dry by people increasingly choosing to have their benefit or pension paid into a bank or building society. It is only by offering choice that we offer some safeguard to the future of the post office network. This is not rocket science.

Kate Hoey: I appreciate parts of what my hon. Friend is saying, but will he give me a clear statement—yes or no—on whether we will still allow payment by benefit book to that smallish number of people who, for particular reasons, want to continue with that system of payment? I thought that we wanted to give people a real choice.

Malcolm Wicks: The pension books, order books and giros that we have now will be phased out by 2005. That is why we need to offer other choices, including—where necessary—an exceptions service. I cannot give my hon. Friend the reassurance she seeks, because that is the logic of the scheme.

Angela Browning: It is important to repeat, for the record, something that my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) did as Secretary of State. As the Conservatives left office, we considered the question of choice, but we also considered the social impact on an elderly population. The old system does cost more money, but we thought that it was worth it for those people who—as the hon. Member for Vauxhall (Kate Hoey) suggested—need to have the security of collecting the money personally through their books. We decided to continue that system until those people were deceased or moved away. There is an important social case to be made for that, but the Minister does not seem to value it.

Malcolm Wicks: We do agree on the absolute right, and need, for many current pensioners and other benefit customers to be able to go to the post office and access their money in cash, if that is their choice. We are finding ways to enable that to happen.
	Most people—although perhaps not all—recognise that order books, which came in with ration books, have had their day. The world has changed enormously since then. Most people now have bank accounts, into which their wages are paid. People are also used to using plastic cards and cash machines. If anyone were designing a new payment system today, the last thing they would suggest would be order books. Indeed, a former Secretary of State has said that
	"the process of distributing benefits by order books was one of the most costly, inefficient and fraud-prone ways of delivering money."—[Official Report, Westminster Hall, 12 April 2000; Vol. 348, c. 62WH.]
	That was the right hon. Member for Hitchin and Harpenden (Mr. Lilley), who was drawing on his experience.
	We announced on 24 May 1999 that we were cancelling the benefit payment card. That project was initiated by the previous Administration and the House may recall that the project suffered from considerable delays and setbacks and that we were left with no option but to cancel it. Had it been successful, order books would already have been abolished and replaced by an electronic card-based system accessible at post offices.
	We have put in place a new system that still allows people to access their cash at the post office and that provides the Post Office with new business opportunities. That is a major part of the strategy. What is more, we have done it on time. The Post Office and all those involved should be congratulated on having universal banking up and running on 1 April 2003.
	I turn now to direct payments. Customers will have more choice about where they collect their money from, which will include the post office, if that is what they wish. In the spirit of consensus, I must say that there appears to be some genuine misunderstanding among Opposition Members about this matter. At the post office, customers will be able to use a current account, if their bank has a network banking arrangement with the Post Office, or a basic bank account, or a Post Office card account.
	Customers will be contacted on the matter over the next two years, and that process is starting already. They do not need to do anything until they hear from the Government. In radio interviews, I have used the phrase "Don't panic!" to make that clear and, if that amuses Opposition Members on a hot afternoon, I am pleased that it does so. In fact, the real Dad's Army was a valued institution at a time of some difficulty and change for this country. I am therefore not too worried about that.

Patrick McLoughlin: The Minister has tried to do what Ministers always do when they want to defend the indefensible—he has said that he does not want to make a political point out of the matter, and that he is seeking consensus across the House. However, if he genuinely wants that consensus, will he say what the Government's objection to the Opposition motion is? It states that
	"there should be no administrative obstacles to customers opening a post office card account; notes the importance of post office card accounts to the future viability"
	of sub-post offices. What is the Government's objection to that?

Malcolm Wicks: I agree with much of the Opposition motion, but we are concerned with setting up a Post Office card account, and I shall come to that.

Anne Campbell: One of the causes of social and financial exclusion is the fact that many people in this country do not have their own bank accounts. Does my hon. Friend agree that the Government's proposals are an important contribution to encouraging people to take up that facility and use it for their own benefit?

Malcolm Wicks: I agree absolutely. Many people have highlighted the problems associated with financial exclusion, not least in terms of our quest to get more jobless people into work. That quest is a feature of what the Government are about.
	We are writing to our customers and setting out the options. Most importantly, only the way in which benefits and pensions are paid will be affected. Customers will still get their money as regularly as they do now, and it is important to note that that will include weekly payments for pensioners.
	The Government's plans, and their funding for the post office network, have taken account of the move to direct payment. In order for the network to have a bright future, post offices need to become providers of high-quality banking services that people want to use. The Government have provided funding to enable them to do that, and to support the network.
	I shall outline the Government's reasons for making the move. They include many of the factors that caused a previous Government to be interested in doing the same.
	Direct payment has several advantages.

Bob Spink: Will the Minister give way?

Malcolm Wicks: I am a generous person—possibly too generous, as the House will tire of me if my speech lasts too long.

Hon. Members: No!

Bob Spink: The Minister is indeed generous. He said that he would set out how the Post Office card accounts work, so how will he answer my constituent in Benfleet? She wrote to me this week to state:
	"I work at the post office on the counter and the palaver we have in opening the P.O. card accounts is quite unbelievable.
	So far our office has only opened three accounts since March, which isn't a very good sign for our jobs."
	I received that letter on 6 June.

Malcolm Wicks: I appreciate the hon. Gentleman telling the House of that experience. I shall deal with some of the numbers involved in a moment, which should in part answer that point.
	What are the advantages of direct payment? As my hon. Friend the Member for Cambridge (Mrs. Campbell) noted, one such advantage is financial inclusion. Most of us take for granted the advantages of having a bank account, and 87 per cent. of benefit customers already have access to a suitable account. The figure for pensioners is slightly higher, at 90 per cent. Like all hon. Members, I am concerned about the important minorities, but we should not typecast all elderly people as people who are not in the financial mainstream, as nine out of 10 already have accounts with banks or building societies. However, that leaves about 3.5 million adults in the United Kingdom without access to a bank account and unable to take advantages such as savings to utility bills that come through making payments by direct debit. Some of those people are unemployed and will need a bank account when they get work. That is important to what we are doing at Jobcentre Plus to ready people for jobs.
	Direct payment will help to spread financial inclusion by increasing the number of people who have bank accounts, giving them opportunities to benefit. The banks have introduced straightforward basic bank accounts over the past few years that are ideal for people who have never used an account before. Many can now be used at post office branches.

Andrew Robathan: I notice that the Minister has not so far mentioned choice. Will he reply to the National Consumer Council, a statutory body, which commented on universal banking in its document, "Everyday Essentials":
	"The object of addressing the financial exclusion of some low-income customers is submerged in a wider agenda to reduce government expenditure."?

Malcolm Wicks: As I make progress, my position on that will become clear. I am grateful to the hon. Gentleman for mentioning choice, to which I was about to turn. To be fair to myself—I like to do that sometimes—I should say that I have mentioned it already.
	Some people think that customers should be persuaded to open a Post Office card account regardless of whether it is the best option for them. We believe in choice. At the end of the day, choice will be determined not by what any Minister or the Post Office or any other vested interest group says, but by what the customer says. Customers should choose the account that best meets their needs and circumstances. People using post offices in future will do so because they want to, not because they have to. In future, a pensioner may well access her money at the post office through the card account while, on either side of her in the queue, a doctor may be accessing money through his or her bank account and a young unemployed man is using a basic bank account. People will use different methods to get money, but will choose to do so at the post office if it suits them.

Peter Luff: Why, then, is a pensioner in my constituency being forced—she has no choice—to open a bank account? She wanted to pay her Royal Mail pension—I stress Royal Mail—into the Post Office card account. Because the Government has limited the terms of the Post Office card account, she is not allowed to do so. At the age of 91, she is being obliged, forced and compelled to open a bank account for the first time in her life.

Malcolm Wicks: State benefits, including pensions, can be paid into a Post Office card account; private or occupational pensions cannot.

Kate Hoey: Why?

Malcolm Wicks: That is the nature of the product. It is not for me to advise the person in question, but another kind of account may be useful in her situation.
	A second reason why we are moving towards payment modernisation and direct payments is the concern about fraud, which we all share. We lose about £80 million a year in giro and order book fraud. On average, more than 100 pensioners a week have their order books stolen. Cards can be stolen, and we understand that there are such risks in our society, but let us bear it in mind that too many people are mugged and have their cash and pension books stolen. A spokesperson for the Association of Chief Police Officers said:
	"Anything that reduces the opportunities for crime is a benefit. In particular this move will hopefully protect the more vulnerable members of society and enable them to feel safer."
	One advantage of the Post Office card account is that the pensioner or other benefit recipient no longer has to draw all their money. If a pensioner wants to take half of it, or whatever, the rest can remain in the account. Most people would concede that that is an advantage over the current system.
	A second advantage is that there are administrative cost savings. I make no apology for that; it is right to cut unnecessary administrative expenditure. Each pension book foil costs 68p and every giro costs £1.47, while payment into a bank account costs only 1p. I am sure that the Opposition do not really want to spend more money on social security administration just for the sake of it.

Nick Gibb: The hon. Gentleman refers to the administrative savings, but is he aware of the extra transport costs for pensioners in the Pagham area of my constituency? Pagham post office is going to be closed and they will have to make a two-mile round trip to collect their pensions. Can the Minister explain why the Post Office counter in Pagham is not being offered, as a matter of course, to other shops on the Pagham parade so that there will be a service for pensioners in the area?

Malcolm Wicks: I suspect that my hon. Friend the Minister for E-Commerce and Competitiveness may deal with such issues in the wind-up. The Government cannot guarantee that every post office will stay open. The hon. Gentleman is a fair man and will accept that we have seen many, many closures over several decades. Obviously, in such situations, we are all sensitive to how people, whether in his constituency or mine, can access money. We have to think through the details of the individual cases.
	What is the process for opening a Post Office card account? In effect, customers have to take only three steps. First, after hearing from us, they ring the customer conversion centre to discuss their options. It is important that those options are spelled out. Secondly, they await a personal invitation document from our Department to take to the Post Office branch to collect a Post Office card account application form to complete. Thirdly, as with all accounts, they then send the required account details back to the Department of Work and Pensions.

Oliver Heald: Will the hon. Gentleman give way?

Malcolm Wicks: Not just yet.
	People have accused us of making the process of opening a card account difficult—I think that the hon. Gentleman might have done so—and have said that the customer conversion centre is trying to dissuade people from opening a card account.

Peter Luff: It is.

Malcolm Wicks: That is simply not true.

Kate Hoey: Will my hon. Friend give way?

Malcolm Wicks: Not just yet.
	At the risk of bringing evidence to bear on the debate, independent research by Postwatch, the consumer watchdog, has shown that 88 per cent. of pensioners said that they felt that advice from the customer conversion centre
	"was given in a clear and unbiased manner".

Richard Page: So what?

Malcolm Wicks: Well, that is the Postwatch evidence.
	Postwatch also found that 94 per cent. of those ringing the centre to open a card account felt that the information they were given was "clear and unbiased", and 91 per cent. of pensioners who rang the centre did not feel that staff were seeking to persuade them to choose one option over the others.
	We are spending a good deal of money on communicating the direct payment message. It is right that we do so. When I told the Select Committee on Trade and Industry that I realised that there was still confusion, I was being honest. This is a major change and, understandably, many of our constituents have not yet fully understood the choices available to them.
	We are spending £25 million over the next three years on advertising. Many hon. Members will have already seen the advertisements. All the material that we are sending customers mentions post office access and the Post Office card account. Government material is complemented by the Post Office's own leaflets and advertising. Postwatch research shows that 93 per cent. of pensioners described my Department's customer information material as "of good quality".

Roger Gale: Why do our pensioner constituents have to jump through hoops, make phone calls and await a form when they could perfectly easily go to the post office, collect the form and fill it in, as they do for other services such as driving licences and passports?

Malcolm Wicks: Opening any bank account is more complicated than the hon. Gentleman suggests, and rightly so. We are concerned about fraud and impersonation—people pinching other people's identities. It is also important to note that the Post Office card account is only for customers of the Department of Work and Pensions—pensioners or benefit claimants. I said "only", but there are, of course, millions of them. Sending people the personal invitation document is verification from the Government that it is a bona fide application for the Post Office card account. In terms of security and fraud and identification, the document is a very important component. I hope that satisfies the hon. Gentleman.

Oliver Heald: Will the Minister give way?

Malcolm Wicks: Not just yet. I will of course give way in a moment, but I think that I have been relatively generous.

Oliver Heald: Very generous.

Malcolm Wicks: Thank you very much.
	I shall now report on the progress that we are making, because colleagues are interested in what is happening. So far we have sent out 2.5 million letters inviting customers to convert to direct payments. We are doing that gradually, phased over two years. It is important that we do so, given the numbers involved. One and a half million customers have responded with bank details. There will of course be a lag, and people should not make too much of the fact that not everyone has yet replied. Some have only just heard.
	More than 300,000 customers have requested a Post Office card account. However, the customers contacted so far are not representative of the whole benefit population, because we have gone for certain client groups early on, so simple arithmetic, such as division, of these statistics would not stand up to analysis. We need to take care in extrapolating from the figures. However, even though migration is still at a very early stage, a large number of customers are already requesting a Post Office card account. The latest figures that I have, for 30 May, show that the proportion of pensioners requesting a card account was around 50 per cent.—I say "around" because that figure will fluctuate. It is not a reflection of what it will eventually be, but it is around 50 per cent. Some 40 per cent. of Jobcentre Plus customers and 12 per cent. of child benefit customers have requested a card account.
	Many of those opting for a current or basic bank account are also choosing to use them at post office branches. If, as some allege—I think unfairly—that is difficult, why is the Post Office card account proving a success, with many people opting for it? We shall provide regularly updated figures to the House by regularly placing a report in the Library.

Richard Page: No sane organisation embarks on such a massive change without proper evaluation or surveys or pilot studies. What pilot studies and evaluations did the Government carry out before starting this exercise? For example, how many of those people will convert to Post Office card accounts? What percentage do the Government expect that figure to reach?

Malcolm Wicks: I have given percentages of what is happening—

Richard Page: I know, but what are we going to get to?

Malcolm Wicks: They are the crucial percentages, yes, but I emphasise that they depend on what people choose to do. Of course we evaluated all aspects of this. There was research—the Post Office did its own work, and so on. We talked to all the obvious groups and they were very helpful. Our planning assumption has been that 3 million Post Office card accounts might be opened, and that under the terms of our contract with the Post Office between 2003 and 2010 that could be worth £1 billion to the Post Office. However, that is a planning assumption; it could be less, and it could well be more, depending on choice. I hope that the hon. Gentleman finds that helpful.
	I move on to some of the issues about the more vulnerable groups that we are all concerned about. We have been sensitive to the needs of vulnerable customers. Third party access will continue to be available under direct payment. There are a number of tried and tested options for bank or building society accounts, including power of attorney arrangements, arranging a third party mandate, and having payments, where appropriate, paid into a joint account. People with a Post Office card account will be able to obtain a second card, with a separate PIN, to enable a nominated person to access their account. However, we have always recognised that there will be some people whom we cannot pay by direct payment. They could include those who cannot get any sort of account, although they are a tiny number, and some people who need casual agents—perhaps people with serious learning difficulties, or some who may be suffering from Alzheimer's or other forms of dementia. I hesitate when I talk about those with serious learning difficulties because I know many people with learning difficulties who are perfectly able to access their accounts, and none of us wants to stereotype in that way, but of course there will be some of whom we need to take special care because of the nature of their disability—I mentioned Alzheimer's as an example. We also need a way to make urgent payments, such as those through crisis loans.
	Order books will continue to be available for people who cannot manage the new arrangements until conversion to direct payment is completed in 2005, which means that we have time to get things right. People will be able to keep their order books during that period and the exceptions service will be in place before order books are phased out.
	We want to design the exceptions service to meet people's needs properly. We need a better understanding of the problems that some people will face. Rather than guessing the circumstances with which the service will be required to deal, we will closely monitor the way in which the new arrangements for direct payment operate in practice and work with customer representative groups to design a secure and efficient service that meets people's needs. We are in regular contact with those groups; indeed, I have held a meeting with them. However, the service will not be an alternative to direct payment or a fourth option. It will be available only to those who really need it.

Oliver Heald: What will the criteria be? The Minister gave the Select Committee on Trade and Industry an example of people who consider that they are unable to use the options. Could such a person use the exceptions service, and will medical evidence be required for that? Will he give us more detail on how decisions will be made? If he cannot do that, will he explain why, having introduced a new measure that is bound to cause concern, the Government did not design an exceptions service in the first place, especially if people will just be sent a cheque in the post, as he told the Select Committee?

Malcolm Wicks: rose—

Mr. Deputy Speaker: Order. Before the Minister resumes his speech, I tell the House that I hope that there will be an opportunity for Back Benchers to participate in the debate.

Malcolm Wicks: I apologise for my excessive generosity.
	At the moment, we favour a cheque-based system to meet the needs of the exceptions service. It will have additional security features so that it will be less prone to fraud than the current giro system. My hon. Friend the Minister for E-Commerce and Competitiveness may deal with issues relating to PIN pads and the Post Office's current plans.
	We are making sensible changes and offering customers a genuine choice. We are listening to customers and their representatives so that we provide a system that meets their individual needs. We are also listening to hon. Members of all parties. All customers who want to continue to receive their pension, benefit or tax credit through the Post Office may do so—just as we promised. They may continue to receive payments at the same frequency as they do now—just as we promised. That can be achieved with a range of account options: basic bank accounts, several current accounts and, of course, the Post Office card account. Anyone who wants a card account may have one, and more than 300,000 people have already chosen that option.
	We are proposing a more modern, efficient and secure system. We are increasing customer choice while providing better value for money for the taxpayer, tackling fraud and increasing financial inclusion. Those are the facts, and I hope that the House will welcome this long overdue social reform.

Vincent Cable: Opposition days usually present an opportunity for a bout of tribalism and sectarianism across the political divides. However, the motion is spot on and I have no problem with it whatsoever. It reflects faithfully the theme of many speeches that I have made about the Post Office and the spirit of the early-day motion that I signed along with many hon. Members of all parties, including the distinguished Chairman of the Select Committee on Trade and Industry, the hon. Member for Ochil (Mr. O'Neill). I would have hoped that almost all hon. Members would reach a consensus that the motion was agreeable, so I am surprised that it has created such division.
	I shall bring the debate to a ground-level reality by mentioning an event from the Whitsun recess. People at my local Age Concern centre organised, among the bingo and tea dances, an advisory session on how local pensioners could deal with the changes. They brought along all the Post Office leaflets and the pensioners gathered round to ask practical and non-political questions about how the new system would affect them. The group was quite large. The nature of the centre meant that all those present were agile younger pensioners who were physically fit and mentally active. Every one of them had a bank account and wanted to continue to use the post office. That simple choice should not cause any great difficulty and the system should easily be able to accommodate those people.
	The main question the pensioners asked was whether there would be a problem with them using their current accounts in the post office. The hon. Member for Stafford (Mr. Kidney) asked the same question. The answer was, "Yes, sort of. It depends which bank you are with." The problem, which was immediately identified, was that people can use their current accounts if they bank with Barclays, Lloyds TSB, the Alliance and Leicester or the Co-operative.
	Just to complicate matters further, one of the brighter pensioners popped up from the back and waved one of the Post Office's newspapers with the headline "Great News. Granddad gets his money for free at the Post Office". However, the article refers to only two banks, the Alliance and Leicester and Barclays. So we needed an explanation of how those differed from the other two banks. It appears that they are willing to offer automated cash access at the post office. The other two offer cheque cashing facilities. Those are different and it is confusing for pensioners. None the less, the basic principle is right. As the hon. Member for Stafford said, people who bank at those banks can get cash from the post office. That pledge is honoured in a general way and there is no problem for those people.
	However, the majority of people in the meeting did not bank at those banks. Like 55 per cent. of the British banking population, they banked at the NatWest, the Royal Bank of Scotland, the Halifax Bank of Scotland, the Midland—now HSBC—and the Abbey National, which do not offer the same facility. So the pensioners asked, "How do we get cash from the post office?" The answer was, "Well, if you want to continue using your bank to get access to post office facilities, you have to open a basic bank account in addition to your current account." They had never heard of it and were told that it was a simple account, to which they replied, "We are not simple people. Why do we need a simple account?"
	The people giving the advice explained that the account is different from other accounts and that its features are restricted. They went on to set out some of those restrictions. The Department for Work and Pensions also sets them out in its document. It is not, for example, possible to run an overdraft, as has been mentioned. The Department states:
	"But you need to make sure you have enough money in your account or the payment will not be made and you may be charged for this."
	It does not say what the charges are and that information is not easy to access.
	The audience then said, "If this is how the basic bank accounts operate, surely we'll need to find out from the post office that we go into what state our accounts are in so that we don't inadvertently become overdrawn." The Department helpfully says a little later on in its document:
	"With some basic bank accounts, you will also be able to check your balance there."
	It does not say which accounts or banks. That is left unclear. So 60 per cent. of the audience—55 per cent. of the general public—will not be able to access the service in the post office. They will have to go through a basic bank account if they want to continue to use its banking services.

Michael Weir: Does the hon. Gentleman agree that the situation is worse in Scotland, where a greater number of people bank with the Royal Bank of Scotland, the Bank of Scotland and the Clydesdale than with the banks that offer the post office service?

Vincent Cable: The hon. Gentleman is right. I tabled a question to the Secretary of State for Scotland a couple of weeks ago. We did not reach it, but it made precisely that point. I think that in Scotland about 90 per cent. of the public will not have access to the service. They will have access only through the basic bank account, with all its limitations. For those people and the people who do not have bank accounts at all, the Post Office card account is clearly the mechanism of choice if they have an unrestricted choice between the three mechanisms open to them.

David Kidney: Before the hon. Gentleman goes on to discuss the Post Office card account, will he say whether he agrees that it is as important for the future of our post offices that those bank accounts work through the Post Office, as the Post Office card account does? They are both important—it is not a case of one or the other.

Vincent Cable: I completely agree. We can criticise the Post Office card account, but the Government are at fault for failing to pursue banks that are not operating the full service. They should be named and shamed, particularly in Scotland. The banks have got off lightly. They have not been regulated after the Cruickshank report, which pointed to overcharging. They have offered a minimal service, and they think that they can get away with it. The Government should be demanding that NatWest, Abbey National and the rest offer the same services as their competitors. On that basis, the hon. Member for Stafford is right.

David Kidney: I very much agree with what the hon. Gentleman has just said, and shall give another example of sub-postmasters' complaints. One sub-postmistress rang one of the banks to say that she had a customer who wanted a basic bank account, but the person at the bank said, "I don't know what that means."

Vincent Cable: I shall press on specifically with the Post Office card account. The Conservative spokesman made two criticisms of the way in which the Government have approached that account. First, there is the absence of a level playing field for the three options. Secondly, there is the problem of complexity. Opposition parties can make such points, but I want to refer to a neutral source. In his speech, the Minister referred admiringly to Postwatch, the regulator. However, he may not have noticed what Postwatch, in its evidence to the Select Committee on Trade and Industry, said about those specific points. Ms Foster from Postwatch said:
	"Post Office Limited had an agreement with the Department for Work and Pensions . . . that all three accounts have to be mentioned at the same time and the fact that the Post Office card account had to come third on that list . . . our main concern is that it is appearing to be much more difficult to open a card account at the post office than to open a basic bank account. Consumers have to go through eight steps, which have been outlined to you in this submission, and for a lot of people who are not familiar with these account systems and banking systems, these seem to us to present unreasonable barriers."
	My colleague, the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) asked Ms Foster:
	"Can you think of any reason why they have been put at a disadvantage?"
	She replied:
	"I am mystified as to why the DWP has made it quite so difficult."
	That is the impartial Postwatch, which the Minister prayed in aid a few moments ago. It is also worth reminding him that Postwatch offered to help the Department for Work and Pensions and the Post Office with the pilot studies, but the Government refused to accept that offer.
	However, Postwatch may be too committed a source of evidence, so may I cite some remarks by the Deputy Prime Minister? The Minister may recall that a few weeks ago, the National Federation of Sub-Postmasters, having despaired of getting anything out of the Department for Work and Pensions, asked to seek the Prime Minister. However, he was busy with the war in Iraq, so he referred the federation to the Deputy Prime Minister, who had a look at the problem. In Deputy Prime Minister's questions I asked him specifically about the fact that the application had eight stages which, through his intervention, he had managed to reduce to seven. He replied:
	"I am grateful for the hon. Gentleman's remarks. He makes a fair point that the postmasters felt there was too much bureaucracy in the development of the new card system".—[Official Report, 2 April 2003; Vol. 402, c. 905.]
	The problem was therefore acknowledged by the Deputy Prime Minister himself.
	I have read carefully the Minister's testimony to the Select Committee, in which he gave a series of reasons why the process is complicated. There are issues of security and, in addition, all the problems involved in applying for a bank account, such as the problem of establishing identity. We acknowledge that those are genuine problems. However, given the people we are talking about, those obstacles should be reduced to the absolute minimum. I shall cite some more testimony given to the Select Committee—a particularly valuable exchange between the hon. Member for Kingswood (Mr. Berry) and Mr. Mills, the chief executive of Post Office Counters. It reads as follows:
	"Mr. Berry: So there is nothing that can be done to make the system easier than it currently is?
	Mr. Mills: I absolutely did not say that.
	Mr. Berry: Yes, but, with the greatest respect, I would like to be perfectly clear about what you are saying. You are saying, therefore, that it could be made easier?
	Mr. Mills: Yes.
	Mr. Berry: There would be no technical problems, in your view, to making it easier?
	Mr. Mills: No, absolutely."
	So the Post Office says categorically that the system could be made easier. Any obstructions are not coming from within the Post Office. They are not inherent in the process of ordering a Post Office account. They are being created in the Department. We have not just the views of Opposition parties or dissident Back Benchers; we have the testimony of Post Office management, the Post Office consumers body and everybody outside who has examined the issue.

Chris Grayling: There was printed evidence as well, in that all the material distributed by the Department for the launch of the child benefit alternative of withdrawing money from the post office placed the Post Office card account on the back page, at the bottom, in small print, and the other alternatives in the front, highlighted, with big flashing neon arrows pointing towards them, effectively.

Vincent Cable: That sounds like a fair summary of what took place, and I endorse it.
	I turn not to my pensioners in Twickenham, who want to operate through the banking system, not to the people who, despite the obstacles, will eventually be able to get the Post Office card account, but to the people who will not be able to access the system at all and who will fall within the exemption system. What worries me—again, evidence of this came before the Select Committee—is the total lack of preparation. The Minister seemed to imply that there was a process going on. If it is going on, he has not told the Post Office. Mr. Mills, the chief executive, was taxed about the problem by Labour Back Benchers.
	The exchange was initiated by the hon. Member for Ilford, North (Linda Perham), who asked:
	"Can you think of any other alternative for people who obviously cannot use a bank account or the Post Office card account?"
	Mr. Mills replied:
	"I am sure we could. We have not been asked to yet."
	The hon. Member for Preseli Pembrokeshire (Mrs. Lawrence) asked:
	"Have you been consulted about what it should be?"
	to which Mr. Mills responded:
	"No, not yet."
	Nobody has asked the Post Office what the exemption service involves. I do not know whether the Minister sees that as the Post Office working independently, but surely the people at the sharp end, the people who run the post office network, should have some idea of what an exceptions service entails, and they say that they have not even been asked.
	I return to the basic economics of the network. We all agree that if pensioners and others need access to the post office in order to draw their cash, the post offices must be there. One of the fundamental problems is that if post offices are closing, it becomes more difficult for that to happen. We see that in our constituencies. There is a programme—the ludicrously entitled urban reinvention programme—that is cutting a third of all branches. We have all seen it beginning, but we do not know where it will end because we are not told and we are not given a list of closures. So far I have two in my constituency. The immediate consequences are greater difficulty of access for those in the areas affected, and greater crowding at post offices and longer queues. Access is being reduced daily under the closure programme.

Joyce Quin: I apologise to the House for not being present at the beginning of the debate, as I was attending a long-planned event on EU enlargement. There are post office closures in my constituency, and I know that consultations are part of the closure process. Can the hon. Gentleman tell me whether any consultations have resulted in a reversal of the proposal to close? If he cannot tell me that, perhaps he can ask my hon. Friend the Minister to tell us, when he replies, whether there are any such examples.

Vincent Cable: To be fair to the system, there are one or two cases in which the decision has been reversed, but it is clear from conversations with the people involved that Postwatch, the organisation charged with the inquiries, is overwhelmed by the volume. It does not have the resources to give detailed attention to every individual decision. Closures are happening even though a handful of decisions have been reversed.
	If the closure programme is to be slowed down, the Post Office must find alternative sources of income. That has been the problem from the beginning, which was identified in the excellent Cabinet Office study a few years ago. Where can income come from? First, the easier Post Office card accounts are to access, the more people use them, and the more income comes to the Post Office, directly and from footfall. Secondly—this goes back to the exchange that I had with the hon. Member for Stafford—it does not matter whether people use the banks provided that they can use their bank account in the Post Office and cash cheques. If that system works efficiently and fairly, the Post Office receives income, the people still come to the Post Office and the problem is alleviated. Insufficient pressure is being put on the banks, which are effectively opting out of that system at present.
	Thirdly, we have the question of new sources of income. The postmasters have already had the disappointment of the "Your Guide" system being pulled from under them. I have seen the finances of that scheme and it did not make commercial sense for the Post Office, so I can see why it did not go ahead with it. Other options are being explored. I understand that a good e-shopping system is now being developed in post offices in Cornwall. That development has been entirely spontaneous, it is profitable and may offer a future for substantial parts of the system. The Government really do need to give it the kind of support that it deserves.

Chris Mole: Does the hon. Gentleman agree that the development of internet shopping provides an increasing opportunity for goods to be delivered and picked up at local post offices rather than people having to go through the experience of receiving a card that says that a delivery attempt has been made but that the parcel has been taken away again?

Vincent Cable: The hon. Gentleman is right. There are major potential synergies between the different parts of the Post Office that have only just begun to be explored.
	We are faced with an unnecessary disaster here. If those different elements of additional income were brought on stream, if the Post Office card account were made accessible, if cheque cashing were made easily accessible through all the banks, the process of transition for Post Office Counters Ltd. would be easily manageable and not painful.
	To set matters right, the Government have only to make Post Office card accounts easily accessible, on a par with the other streams of drawing cash from post offices, bring more pressure to bear on the banks and be much more proactive about helping new sources of income generation.

Mr. Deputy Speaker: At the risk of stating the obvious, there is a very short time left for Back Benchers. I am sure that it will be appreciated across the House if speeches could be fairly brief so that we can try to improve the breadth of the debate as far as possible.

David Kidney: I shall do my best to be as brief as you have urged us to be, Mr. Deputy Speaker.
	I do not think that it is right to say that the Post Office card account might be the saviour of post offices. Just before Christmas in Stafford I faced a big audience of sub-postmasters and sub-post mistresses and local and parish councillors who were all concerned about the future of their post offices and wanted a great campaign to ensure that everybody signed up for a Post Office card account. I sympathised with them for their struggling businesses and the obstacles in the way of people opening Post Office card accounts, so I had meetings with Ministers, asked parliamentary questions and wrote to Ministers about the obstacles. I endorse everything that the hon. Member for Twickenham (Dr. Cable) said on that subject. But I had the feeling that people were clinging to a diminishing market that in the end would see them out of business, and I recognised that it was as important to ensure that there were other opportunities for post offices.
	This year in Stafford, jointly with my Staffordshire Parish Councils Association, I held a working lunch for all the people whom we could think of who could help with post offices. They included the Post Office and Postwatch, for obvious reasons; the National Federation of Sub-Postmasters, which has money from the Government's Phoenix fund to offer advice and assistance to its members; the Countryside Agency, because of the support that it can give in rural areas with its community services grants and so on; and Business Link, because of its help to small businesses, the chief executive of which said there and then that it could give free and subsidised help to any post office or small business that asked for it and subsequently agreed to make that clear to every post office in Staffordshire.
	Also present was our regional development agency, Advantage West Midlands, which is responsible for economic development. It provided a list of people who could offer venture capital funds, including an enterprising fund in north Staffordshire dispensing very small amounts to give people access at the bottom end of the market. BT was there because it sponsored the lunch and already has a significant working relationship with the Post Office, which it wants to continue. It is particularly interested in broadband connections in rural areas. The Learning and Skills Council was represented because of its responsibility for training and life-long learning.
	That brings me to what happened next. This week, we had a meeting at Rodbaston college of further education, which we chose because it already has experience of such issues through offering courses on business diversification. Those are used mostly by farmers, but it occurred to me that many post offices might want advice and training on diversification. At the meeting, the college said that it could help in many ways—not only through that course, but by advising post offices about marketing, business management, book-keeping, and disseminating best practice between themselves, perhaps going on to form clusters of post offices that can support each other. We are hoping to put together a package to offer those options to every post office in Staffordshire.
	I want to mention, as did the hon. Member for Twickenham, the follow-up to "Your Guide". The evaluation was not quite positive enough about increased footfall and sales, and the Government therefore decided not to pursue it at their own expense. Now, private enterprise is trying to make it successful, with the first opening, by E-Daily, taking place in Cornwall in May. E-Daily has an ambitious programme of making touch screens available in 15,000 places around the country by the end of next year, which would be an impressive achievement. Next week, I am due to go to its Bayswater office to look at the technology to see whether there is something in it. It has an e-shopping aspect. The touch screens also give access to information on local government and the goods and services that are available in the immediate locality. That represents an exciting possibility. I had hoped that BT could offer such a service, but E-Daily got in first.
	Nationally, there are the TV advertising campaign, with the three choices that were mentioned; the Post Office's own campaign, "Carry on Collecting", with which it has now been allowed to proceed; and the campaign by the Communication Workers Union, "Do your banking at the Post Office".
	Each one of us individually can play our part, just like the people I listed, in helping post offices in our areas to expand their business base and to increase their footfall. They should not keep looking back to the business that they used to get from the Government and try to cling to as much of it as possible for as long as possible, but try to develop modern successful businesses in which people can feel that they have a future. That is my ambition in my area, and I hope that it is every other Member's ambition in their area.

James Arbuthnot: Some extremely valuable points have been made on both sides of the House. In view of the pressure of time, I shall make only three points.My first point concerns the promotion of the card account. On Monday, my hon. Friend the Member for Mid-Worcestershire (Mr. Luff) asked the Secretary of State for Work and Pensions:
	"Why are sub-post offices not allowed to promote it to their customers?"
	The Secretary of State replied:
	"Many sub-postmasters and postmistresses have been energetic in promoting the Post Office card accounts."
	He continued:
	"As I said . . . in my initial answer, around half of the pensioners who have responded requested the Post Office card account. That hardly points to failure to promote it."—[Official Report, 9 June 2003; Vol. 406, c. 387.]
	I understood that to be a clear statement that sub-postmasters and sub-postmistresses are allowed to promote the card account. I hope that that is true, and that if the Minister says that is wrong the Government will change their mind. The sub-postmasters in my constituency believe that they are under instruction not to promote the card account. They are angry about that, and I hope that any such instruction will be reversed.
	My second point concerns the complexity of the card account. I believe that Ministers have been actively trying to discourage the card account. In April, a memo went out from head office saying that an instruction had been issued to the effect that when post offices applied for card accounts, two forms had to be attached to each other, and that if they were not, the application would thereby be rendered invalid. However, the memo also stated that everything would be changed and that the two forms were not to be attached to each other after all. Moreover, it stated that attached forms would render the application invalid.
	That might sound like a funny bureaucratic muddle, but it is not funny; it is serious. It is not surprising that another memo went out from head office last week. It stated that the process of applying for card accounts was so complicated that 25 per cent. of applications had been rejected. Consequently, the applicants whose applications have been rejected must undergo the whole awful rigmarole again. The vulnerable in our society are being worn down to persuade them to accept the Government's options. It will not do.
	Pensioners are being discouraged. In April, I visited seven sub-post offices in my constituency, and I spoke to some sub-postmasters again today. One told me that pensioners in my constituency understand that they will not be able to collect their benefits from post offices but will have do that through their bank accounts. Many who have bank accounts are being panicked into giving details of them, and to them, that means that they will not be able to collect benefits from a post office.
	My third point is that this is a serious matter. In south Warnborough in my constituency, the sub-post office is also the village shop, the local coffee house, the meeting place and the informal social services centre. For many pensioners, the walk to the post office every week is the only time that they get out and meet anybody. It may be the only time that they get any company. Some pensioners stay in the post office for hours, doing nothing except enjoying the company of those who come in at the same time. In that way, they can be checked on. If they do not turn up, the post office sends out the local rural support group. It is informal but effective. The Government have not fully understood the effect of their proposals on rural areas.
	After my recent tour of the sub-post offices in my constituency, Mr. Tony James, the sub-postmaster at Selborne, a lovely rural village, which, like so many, revolves around the village post office, said that he believed that it was too late. He said that,
	"by actively encouraging the payment of benefits and pensions via bank accounts, the Government is taking the lifeblood away from the post office".
	We look to the Minister to prove him wrong.

Vernon Coaker: I want to speak only briefly so that other hon. Members can contribute. Clearly, the Post Office card account is crucial to the future of the Post Office, but people who want such an account have experienced problems. We all have constituents who have told us that they are not being encouraged to take up the option. Labour Front-Bench Members should listen to some of the points that have been made in the debate if we are to give people a genuine choice.
	The last line in the Government amendment states that
	"the move to Direct Payment is central to the future of a successful modern Post Office."
	That is true to an extent, but I want to emphasise the points that have been made to me. Dispelling some of the ignorance about the services that are available at a post office is also central to the future of a modern Post Office. The Government should consider the way in which they will deal with that ignorance and make more of the public aware of what they can do at the post office. Part of that must surely involve looking at the kind of campaign we can have to encourage people. There was once a campaign for village shops and facilities—and, indeed, facilities in certain urban areas—which urged people to "use it or lose it". We need to say to people that post offices cannot live on emotional good will alone, and that they have to generate new business that will support them.
	We can subsidise post offices. Indeed, we are considering doing that in rural areas and in some of the deprived urban communities. As well as that, however, we need to consider how we support post offices in terms of generating business and allowing them to have the business that will support them, so that they can remain available to people. This is of fundamental importance when we are talking about financial exclusion and about making the facilities that post offices offer available to everyone. In communities in which the bank has gone and many of the village shops have gone, the post office is often the last thing that is left. In terms of access, we need to regard the post office as a community bank—almost a people's bank.
	The Post Office clearly has to modernise, and part of that modernisation will involve Post Office card accounts and the installation of the new computer equipment. It must also involve the Government supporting sub-postmasters in generating new business to help them to keep their post offices alive. The Government must support them in the advertising that they are producing to make clear the kinds of services that are available.

Joyce Quin: The situation that my hon. Friend describes is certainly familiar to me in my inner urban constituency. Having heard what has been said about rural post offices, I think that rural and urban areas have a lot in common in this sense, because in some urban areas, the post office is sometimes the main commercial outlet for an estate or a community. I would like to support what my hon. Friend said about diversification. Would he agree with me that it is important to—

Mr. Deputy Speaker: Order. The right hon. Lady seems to be inserting a speech into her intervention and we are very short of time. She has not been here for the whole of the debate.

Vernon Coaker: I agree with the points that my right hon. Friend has made so well. Diversification is crucial, and the Government need to do what they can to support the generation of that new business if we are to have an extensive post office network that offers the opportunities that we want to all our people.

Andrew Selous: I think that we would all agree with the valid point made by the Minister earlier that it is important to reduce the administration costs of social security. However, when he was pressed on the question of retaining pension books by the hon. Member for Vauxhall (Kate Hoey), he effectively said that there was no choice. He gave a clear answer to her question on that. For existing pensioners, that is a great shame. They should be allowed to keep that choice.
	The hon. Member for Cambridge (Mrs. Campbell) said that pensioners and others should be encouraged to have bank accounts. That sentiment will have widespread support in the House, but not giving people any choice is a funny way of encouraging them; it is more like forcing them. We should also be aware of the social costs to existing pensioners who want to keep their pension book and to go into the post office once a week because of the support that that gives them.
	The National Federation of Post Office and British Telecom Pensioners, which has 100,000 members and is headquartered in my constituency, has told me that it is ridiculous that there should be seven steps involved in setting up a Post Office card account. The fact that someone can get a passport application form from a post office counter is really a killer argument, because what could be more important or secure than a passport?
	I hope that the Minister will respond to the point about home helps having to memorise the PIN numbers of perhaps 20 different people. I mention that point in the hope that he will respond to it specifically when he winds up. I also hope that we shall get an answer to the question about what happens when a carer, who can hold a person's second Post Office card account, goes on holiday. From the information that I have seen, there is no answer to that, which must be a great worry to many people.
	Post offices are losing 41 per cent. of their income through automated credit transfer, although, as we have heard, in some cases there are good reasons for that. Of course diversification is important—I agree with the hon. Member for Stafford (Mr. Kidney) that we need to encourage future viable businesses—but if there is no post office in the first place, because the income is gone and it has closed, it will be too late. Studham, the village where I live in my constituency, has lost its post office, as has Totternhoe, and an urban post office in Downside has also gone in the last month or so—although I am pursuing that closure actively, and have not yet given up.

John Horam: Will my hon. Friend give way?

Andrew Selous: I hope my hon. Friend will forgive me if I do not. I have only one minute left, and another Member wishes to speak before the winding-up speeches.
	I do not think that the vital importance of the Post Office card account has been stressed enough today. It is the only account that requires people to go into post offices. That is critical, because post offices cannot survive solely on the basis of transaction payments for the processing of benefits. They need people to go in and buy other goods.

Michael Weir: Every speaker today has talked about choice, but listening to the Minister talk about choice reminded me of Henry Ford's dictum on the model T: "Any colour so long as it's black". According to the picture that he painted, post offices will be used for all sorts of banking facilities; but that is not what will happen. As was pointed out by the hon. Member for Twickenham (Dr. Cable), many bank accounts cannot be used in post offices—and, as I said earlier in an intervention, the situation is even worse in Scotland.
	The Minister said that choice was already being exercised, and that six out of 10 new applications for child benefit involved direct payment. That is hardly surprising, as those applying for child benefit are much younger than the many pensioners who are deeply concerned about the move to bank accounts. That move, however, will not just affect our constituents; it will affect the Post Office badly. Thirty-five per cent. of the network's overall annual revenue already comes from contracts with the Benefits Agency and its Northern Ireland equivalent. In many areas, more than 40 per cent. of small post offices' income comes from benefit payments.
	The argument that claimants will be able to collect benefits at banks will not wash, as over the past 10 years, banks have been steadily cutting branches in rural areas and small towns. But those are not the only areas affected. A fast-expanding town in my constituency, Monifieth, has just lost the last of its bank agencies. As in many rural areas, a local solicitor had become the agency for the Halifax, which has recently closed. There are now no banking facilities in an expanding town where there are many new people and much new building. People in that town will not have the option of using banks if the post office cannot deal with their requirements.
	I think we would all be happy if ordinary bank accounts could be used at the post office, but that is not the case. Many people who receive benefits will face a long journey, whose cost will eat into their already meagre incomes.
	There are also serious problems for those who have no bank accounts or Post Office card accounts. That was discussed only this week during Trade and Industry questions. The Minister for E-Commerce and Competitiveness, the hon. Member for East Ham (Mr. Timms), said that 3.5 million people in the UK currently had neither a bank account nor a Post Office card account. Not all of them will be benefit claimants, but it is a fair guess that most of them are. What will happen to those people? Will they all be able to obtain bank accounts? What if they want Post Office card accounts? Will they be able to get them, given the complications of the system?
	The Minister spoke of the number of card accounts that had been opened. I asked a parliamentary question about that, and I think that on 9 May there were about a quarter of a million. Now the Minister quotes a figure of about 300,000. That is still a very small amount of card accounts. Unless there is a way to ensure that all those who want one can get one easily, there is a serious problem. A total of 3.5 million do not have a bank account or card account.There is a substantial demand for benefits to be paid in the traditional way. If it ain't broke, why fix it?
	Like all other hon. Members, I have heard from a stream of people who are concerned about the matter. They have tried to get a Post Office card account and felt that they have been put off. At trade and industry questions, the Minister for E-Commerce and Competitiveness said:
	"I have seen a variety of quite bright and attractive literature from the Post Office about direct payment, in which the Post Office card account features clearly."—[Official Report, 5 June 2003; Vol. 406, c. 291.]
	I do not know what he meant by "clearly". The literature that I have seen is far from clear. He did not comment on whether the Department for Work and Pensions, the Inland Revenue and the Veterans Agency have made it clear in their literature that the card account is available. The plain fact is that they have not, and many people have found it difficult to get the card accounts in the first place.

Andrew Robathan: This is an unusual occasion. Every year there are literally thousands of early-day motions. Many of us feel that many of them are worthless but in each early-day motion many hon. Members call for a motion to be debated "at an early day". How pleased the nearly 400 hon. Members who signed the early-day motion on the Post Office card account must be today.

David Kidney: If the hon. Gentleman would like to maintain the massive cross- party support for the early-day motion, will he announce that there will be no Division at the end of the debate?

Andrew Robathan: Of course not. We want hon. Members to put their money where their mouth is. It is a genuine cross-party motion and genuine cross-party points have been made on both sides of the Chamber. The motion has united the Democratic Unionist party, the Ulster Unionists and the Social Democratic and Labour party, which the Belfast agreement has failed to do. It has the highest number of signatures of any early-day motion this Session—385. That is one of the highest ever. Only one other this Session has attracted more than half the signatures of hon. Members in the House of Commons: that congratulating the excellent Laurie Kaye of the Table Office on his retirement.

Vernon Coaker: Will the hon. Gentleman give way?

Andrew Robathan: I am sorry. No.
	We therefore know that the motion is bound to pass, with so much support.
	The debate has revealed that Government policy on the Post Office is in complete tatters; it is in chaos. The Department of Trade and Industry wants to keep the post offices open, yet it is closing three out of eight urban post offices. There is no proper plan. The Select Committee heard that last week.
	The Department was meant to close post offices that were not in retail hotspots. It was meant to identify retail hotspots and to close the rather less good post offices, but it is just closing post offices where the postmaster has volunteered to take the redundancy package, or where managers may obtain bonuses by meeting their targets. There is no logic there. There is no more logic in Labour Members voting on 15 October for the urban network reinvention programme to close three post offices out of eight in urban areas and then campaigning in their constituencies to keep them open. The hon. Member for Leicester, East (Keith Vaz), my neighbour, whom I have warned of this, is campaigning to keep open Humberstone post office, as he campaigned to keep open Scraptoff Lane post office. In fact, his photograph appeared twice in the Leicester Mercury last week under the headline, "MP campaigns against post office closure". It should have said, "'I voted to close three out of eight post offices in my constituency', says MP".
	There is £450 million over three years for rural post offices. That takes us to the beginning of 2006, when the general election will be well out of the way. What is the future after that subsidy? We hear no answer. There should be a good future for the Post Office but I do not intend to dwell on that now. The PIU report offered hope. For example, it offered e-government, "Your Guide", which was binned after some £20 million was spent on it, universal banking and the Post Office card account, but we discover that the Department for Work and Pensions and the Treasury have to pay for that, that they do not want to—I understand why—and that they are not committed to keeping open many much loved post offices. The DWP has won out over the DTI.
	The Minister talked about choice. Indeed, the hon. Member for Angus (Mr. Weir) mentioned Henry Ford's dictum. It is true. People can get their benefits paid in any way they like as long as it is by ACT. That is the choice that is being offered by the Government.
	The reality of the situation is spelled out by Mr. Tony Kuczys—the Under-Secretary will know him—who is in the universal banking policy division at The Adelphi. He wrote to Ministers on 18 April last year about letters to benefits claimants, and discussions with the British Bankers Association and the National Federation of Sub-Postmasters. He said:
	"we should be clear that neither body will much like what they see"
	in these letters. He continues:
	"The emphasis of the letters is very much on encouraging people to use existing accounts where possible—in line with Ministers' decision to go for 'actively managed choice'."

Vernon Coaker: Will the hon. Gentleman give way?

Andrew Robathan: I am sorry—I do not have the time. The letter continues:
	"Both the banks and the subpostmasters would really like a completely free choice. We will have to make it clear that this is not on offer . . . In discussion with the BBA and the NFSP we might want to concede giving a bit more prominence to the Card Account at Post Offices, once it is available."
	The letter then states:
	"the Card Account will not initially be included in the leaflet",
	as we know. So that was the plan: do not tell people about the card account.
	We also have the "Customer Journey", which I am told is so simple. According to the document entitled "Post Office card account—Customer Journey", if a customer who wants to use his bank account supplies his bank account details, no further customer action is required. However, if he chooses not to do so, there are 20 further steps to be taken.
	The Deputy Prime Minister made the concession that every leaflet would have on it the Post Office card account alternative. Of course, those who ask for that alternative are immediately referred back to the start of the customer journey, and they have to telephone the call centre. Somebody who should know described the call centre as "a horror story". Indeed, pensioners in their 80s are being harassed by call centres to go for automated credit transfer.
	A sub-postmaster from the west country whom I was speaking to this morning said that he had never seen a Post Office card account being used. Last week, he finally managed for the first time to get an assurance that a completed, successful application for a Post Office card account would go in, but he has not yet seen it and the customer is still waiting for the card. I am told that other initial applications are being stockpiled, for whatever reason. Perhaps the Minister might like to tell us whether that is true.
	I have in my hand such a card. I shall hold it up for the House's benefit, because I suspect that many Members will not have seen what they look like—just as many sub-postmasters have never seen them used in anger, some 10 weeks after the system started.
	Universal banking will mean an average loss of perhaps 40 per cent. of a branch's income. How will that be replaced? When discussing payment to postmasters for benefit transactions, the Post Office threatened to impose a settlement. It has now agreed one: 14p per £100 of benefit paid out. Currently, postmasters get 13p for a benefit transaction. However, as we have heard, pensioners might easily choose to take out their benefit in slugs of, say, £20. So three, four or five time-consuming transactions could be involved in order to earn 14p. Of course, the real truth is that far fewer people will use Post Office card accounts, the footfall will fall and income for postmasters will crash. We do not want that to happen.
	What is the Government's assessment of the impact on sub-postmaster income, and of the future income stream for the post offices? We heard about internet banking, which is very sensible. Let us hear more about what post offices can do, and be encouraged to do, in terms of receipt and collection of e-banking. How much do the Government expect to save through the policy of universal banking? Altogether, some £430 million is paid in terms of benefit transactions. How much do the Government expect to save by undermining the post office network?
	On 15 October last year, I suggested that the Post Office was insolvent—or would have been if it were a private company. The Minister contradicted me, so perhaps he can tell me whether what the chairman, Allan Leighton, and the chief executive, David Mills, told the NFSP conference last autumn was right: that Allan Leighton has threatened the Government that he would declare the Post Office insolvent.
	So what is the future for the post office network, which is so important for communities throughout the land, as we have heard? I do not wish to dwell on the speeches—heavily curtailed—that were made by Back Benchers, but I should point out that they were making cross-party points. We should appreciate that. The hon. Members for Angus, for Stafford (Mr. Kidney) and for Gedling (Vernon Coaker), my hon. Friend the Member for South-West Bedfordshire (Andrew Selous) and my right hon. Friend the Member for North-East Hampshire (Mr. Arbuthnot) all made cross-party points with which few hon. Members would disagree.
	My hon. Friend the Member for North-East Hertfordshire (Mr. Heald) raised the complaints of ordinary people: pensioners, the disabled and others who are being brow-beaten, harassed and intimidated into not having a Post Office card account. I briefly quoted the National Consumer Council earlier and I shall do so again. Recommendation 3 of the document, "Everyday Essentials", is that the Department for Work and Pensions and the Post Office should ensure that all benefit recipients, including those with current accounts, have easy access to the card account. We know that they do not, so what happened to joined-up government and the holistic approach to the financially excluded and the vulnerable?
	All we want to see is the customers of the Post Office, the general public, getting a decent choice and a fair deal. We believe that the Government should suspend the universal banking roll-out until a genuine choice is on offer so that customers can get Post Office card accounts and post offices can be kept open.
	We support the hon. Member for Ochil (Mr. O'Neill) and the nearly 400 Members of Parliament who have signed the motion. We support the request of the National Federation of Sub-Postmasters that there should be no administrative obstacles to opening a Post Office card account, and we call on the Government to ensure a level playing field in marketing, promotion and the advance of banking options.
	Anyone who signs a motion should be prepared to vote for it. I wish to quote:
	"For Brutus is an honourable man;
	So are they all; all honourable men".
	However, Mark Antony was being ironic, and irony, I was taught, was the lowest form of wit. I am not being ironic. I know that the motion will pass and I look forward to seeing 175 Labour Members in the Lobby with us in support. 6.51 pm

Stephen Timms: We have had a good debate with some thoughtful contributions. However, I do not know whether the hon. Member for Blaby (Mr. Robathan) has seen the memorandum produced today by the National Federation of Sub-Postmasters, expressing disappointment at the way in which the Conservative party has tried to pursue the issue in party political terms. That has indeed been a disappointing feature of the debate. Nevertheless, as I say, we have heard some thoughtful contributions and the successful launch—

Andrew Robathan: rose—

Stephen Timms: I have very little time, but I shall give way once.

Andrew Robathan: As it happens, more Labour Members' names are appended to that motion than Conservative Members' names.

Stephen Timms: The point is that the National Federation of Sub-Postmasters has today expressed disappointment at the fact that his party has sought to exploit the motion. I hope that the hon. Gentleman will take that to heart.

Andrew Robathan: rose—

Stephen Timms: No, I will not give way again.

Oliver Heald: On a point of order, Mr. Speaker.

Mr. Speaker: I am sure that this will not be a point of order.

Oliver Heald: Is it right for the Minister to say that the National Federation of Sub-Postmasters is against us proposing the motion, given that when I spoke to its general secretary, Mr. Colin Baker, earlier today, he congratulated me?

Mr. Speaker: Let us return to the debate before the House.

Stephen Timms: The successful launch of universal banking services on 1 April fulfilled our commitment to ensuring that people can continue to collect their benefits in cash at the local post office if they choose to do so. Customers now have three account options under the direct payment arrangements for how to they want to be paid. The first is an existing account, bank or building society. The second is one of the new bank or building society basic accounts for those who are new to banking and simply want to pay money in and get cash out, and perhaps pay bills automatically. That includes direct debit: it was said earlier that that is not possible with a basic bank account, but it is. The third is a Post Office card account—a simple account for the receipt of benefits, pension and tax credit payments.
	In opening the debate, my hon. Friend the Under-Secretary made it clear that, of the responses received so far from pensioners—a particularly important group of customers for the Post Office—half requested a Post Office card account, and they will get one. They are making up their own minds and deciding on their choice. About 45 per cent. of Jobcentre Plus customers requested a Post Office card account as well. The proportion of child benefit customers is much lower, but that is no surprise. It demonstrates that people are successfully choosing the account that meets their circumstances best, precisely as we intended. It is also clear that many of those who are not choosing a Post Office card account will—as my hon. Friend said earlier—continue to use their local post office to obtain benefit cash from their bank account. There is also every prospect of those who have not used the post office before being able, for the first time, to access cash with a card at the post office.
	The Post Office card account is an important element of the new framework. For many on benefits, it will be the best account for them. It is simple and problem-free and, on the evidence we have seen so far, it is particularly attractive to pensioners. It is, of course, essential that those who deliver the service do so professionally, efficiently and effectively. It is because of its importance that it features in line 3 of the leaflet that the DWP has issued to explain clearly how the new procedures will work.
	Some people have said that supporters of the Post Office should be pushing people towards the Post Office card account, whether they want it or not. That would be a serious mistake. First, customers should be able to choose the best account for them. Secondly, the card account does not contribute much to increasing financial inclusion, in the way that having a bank account does. Thirdly—and this is the point that I wish to emphasise—the real opportunity for the Post Office going forward is offering access to bank services more widely. It could become, as my hon. Friends the Members for Gedling (Vernon Coaker) and for Stafford (Mr. Kidney) suggested in their thoughtful contributions, the people's bank. Banking is a service that everybody in the country will use and that will allow the Post Office to expand its base of customers, rather than locking it into the diminishing group who only ever want to draw weekly benefit cash. Being locked into that shrinking group is at the heart of the Post Office's problems. The Post Office has to break new ground and win customers who use bank accounts and, thanks to the £500 million investment that we have made in universal banking services, we have put it in a position to do so and to capture new and growing markets, instead of being trapped in declining ones.
	The Post Office already provides banking services on behalf of several banks. It provides a paper-based service that enables customers to cash cheques at post offices free of charge. From 1 April, in a further development of network banking, Alliance and Leicester began providing electronic access to all their bank accounts at any post office. Barclays began doing the same on 23 April. That is a significant development because it means that 11 million current account holders, using their existing cards, can now draw out cash free of charge at every post office from Land's End to John O'Groats. That is 11 million people with a compelling reason, many of them for the first time, to use their local post offices regularly, thanks to the Government's investment in the technology to make it all work, which was—incidentally—delivered on time to every post office.
	The Post Office is talking to other banks to extend access to their current account holders, and several hon. Members have supported that move, too. The Post Office is uniquely placed to provide the banks with additional outlets and that is where its future success will lie. It means that every post office in the country can now say, "Do your banking at the post office." And the Post Office has the technology platform to offer a host of new services that can win a new generation of customers for the Post Office.
	Several specific points have been raised in the debate but because of time constraints I cannot address all of them. However, I wish to deal with a concern raised several times in the debate, about carers with responsibility for several people. It has been suggested that those people might have to remember a different PIN number for every person whose money they collect through a Post Office card account. That is not the case. There is a facility on the Post Office card account so that people can change the PIN numbers and, if they wish, use the same PIN number to access each card account.

David Maclean: rose in his place and claimed to move, That the Question be now put.
	Question, That the Question be now put, put and agreed to.

Question put accordingly, That the original words stand part of the Question:—
	The House divided: Ayes 187, Noes 314.

Question accordingly negatived.
	Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments):—
	The House divided: Ayes 307, Noes 178.

Question accordingly agreed to.
	Mr. Deputy Speaker forthwith declared the main Question, as amended, to be agreed to.
	Resolved,
	That this House recognises that more people than ever are choosing to receive their benefits and pensions straight into accounts and welcomes the significant steps the Government has taken to modernise the payment of benefits and enable customers to choose the account that suits them best; welcomes the introduction of the Post Office Card Account as one important option; further recognises the major benefits the move to Direct Payment will have in cutting fraud and crime and the important role it will play in extending financial inclusion; recognises the importance of this programme, which alongside other initiatives such as Pension Credit, increases opportunities for elderly people; applauds the Post Office and the cross-departmental programme that ensured the new system was delivered on time at the start of April; and believes that the move to Direct Payment is central to the future of a successful modern Post Office.

DELEGATED LEGISLATION

Mr. Deputy Speaker: With the leave of the House, I shall put together the Questions on the motions relating to delegated legislation.
	Ordered,

Food Supplements Regulations

That the Food Supplements (England) Regulations 2003 (S.I., 2003, No. 1387), be referred to a Standing Committee on Delegated Legislation.

Immigration and Asylum Appeals

That the Immigration and Asylum Appeals (Fast Track Procedure) Rules 2003 (S.I., 2003, No. 801), be referred to a Standing Committee on Delegated Legislation.—[Dan Norris.]

Standing Committee on the Convention

Motion made,
	That the Order [12th June 2002] relating to the Standing Committee on the Convention be amended in paragraph (4)(b), by leaving out the words 'or be counted in the quorum'.—[Dan Norris.]

Hon. Members: Object.

PETITIONS
	 — 
	Children's Play Areas

Barbara Follett: I have great pleasure in presenting a petition signed by 268 residents of Stevenage.
	The petition states:
	The Petition of Residents of the Martins Wood Ward of the town of Stevenage
	Declares that they object in principle to the proposed development of the children's play area between Martins Way and Vardon Road also known as the land opposite 276 to 280 Wisden Road which is shown on title deeds as HD97278.
	The petitioners therefore request that the House of Commons urge the Secretary of State for Transport, Local Government and the Regions to take all measures which lie within his power to prevent the sale of this amenity land for development and to enforce the covenant enshrined in the original title deed.
	To lie upon the Table.

Fireworks

Paul Truswell: I present a petition signed by 4,000 of my Pudsey constituents and others concerning their wish for tighter legislation governing the sale, use and noise of fireworks. Its timing is particularly appropriate, given that the Fireworks Bill introduced by my hon. Friend the Member for Hamilton, South (Mr. Tynan) will be considered by the House on Friday when, we hope, it will successfully complete its Report stage and Third Reading.
	The petition states:
	The petition of residents of Pudsey constituency and others
	Declares that fireworks have become an increasingly unacceptable source of harm, nuisance and distress to people and animals throughout the year.
	The Petitioners therefore request that the House of Commons enact legislation that limits the noise levels of fireworks available to the general public, controls the time of year when fireworks can be bought and used, restricts the times when fireworks can be set off, and requires public displays to be controlled by licensed technicians.
	And the Petitioners remain, etc.
	To lie upon the Table.

Local Pharmacies

Jane Griffiths: It is an honour and privilege to present a petition on behalf of residents of Reading and Woodley, particularly the customers of Peskett pharmacy in Christchurch road, Reading and residents in the Lodden Vale, Woodley, Erleigh road and Cemetery junction areas.
	The petition states:
	That local pharmacies should be preserved and their continued services to local communities safeguarded.
	The Petitioners therefore request that the Government reject proposals in the Office of Fair Trading report that would allow unrestricted opening of pharmacies able to dispense NHS prescriptions and replace them with proposals which will retain pharmacies at the heart of the local community playing a key role in primary care services.
	And the petitioners remain etc.
	To lie upon the Table.

ROYAL VICTORIA HOSPITAL, KENT (PHARMACY)

Motion made, and Question proposed, That this House do now adjourn.—[Dan Norris.]

Michael Howard: For some unaccountable reason, there appear to be fewer hon. Members in the House this evening than there were on Monday afternoon. Nevertheless, I am extremely grateful for the opportunity to raise a matter of considerable concern to my constituents.
	The availability of hospital services in east Kent has been a matter of intense local controversy for a number of years, and this is not the first occasion on which it has been raised on the Adjournment of the House. A number of my colleagues, notably my hon. Friend the Member for Canterbury (Mr. Brazier), whom I am delighted to see in the Chamber this evening, and I have raised this question in the past. The whole question of the reconfiguration of hospital care in east Kent is under independent consideration. That could have taken place some time ago if the Secretary of State for Health had heeded the representations that I and a number of colleagues, including my hon. Friend the Member for Canterbury, made about the need for another look at this vexed problem.
	The purpose of my representations this evening, however, is more limited, and relates specifically to a proposal by East Kent Hospitals trust to close the pharmacy at Royal Victoria hospital in Folkestone. The trust is clearly not opposed in principle to pharmacy provision in hospitals, as it does not propose to close pharmacies in any other hospital for which it is responsible. Its proposal to close the pharmacy at Royal Victoria hospital is, so far as I can see, based entirely on a desire to save money.
	No one would quarrel with sensible proposals to save money that did not affect the quality of the health care available to those who need it. It is clear that something needs to change in the way in which health care is delivered in east Kent. East Kent Hospitals trust is in considerable financial difficulty. I understand that its deficit is the second largest in the country.
	That can be a result of one of only two possible causes, so far as I can see. Either the way in which national resources for health are being distributed is grossly inefficient and unfair to east Kent, or the resources made available to East Kent Hospitals trust have been grossly mismanaged. The answer must lie in one or other of those causes or, I suppose, a combination of the two. I make it clear that I am not this evening asking for an increase in the amount of money devoted to health nationally.
	There are particular problems in east Kent that can have arisen only in one of the two ways that I have identified. I hope that the Minister will comment specifically on that point in his reply. I have repeatedly asked for explanations of why the deficit that East Kent Hospitals trust has incurred is so large. It is not at all clear to me, despite the explanations that I have received, which of the two causes is responsible. Whatever the answer to that question, it is essential that whenever changes are made to the provision of health care in a particular area, they should be clearly and convincingly explained, and the rationale behind such changes should be both comprehensible and persuasive.
	Despite the fact that I recently had a meeting lasting well over an hour with the chairman and chief executive of East Kent Hospitals trust, at which the head of pharmacy was also present, I regret to say that no clear and convincing explanation has been given for the proposal to close the pharmacy unit at Royal Victoria hospital, and that I, at any rate, am by no means persuaded of the logic of the proposal.
	The savings that the trust claims would result from the proposal fall into three main categories. The first, and by far the most significant, arises out of the trust's natural and understandable desire to reduce the costs that it currently incurs in paying for the supply of locum pharmacy staff in its hospitals. I am sure that most people would agree that it would be much better to avoid those costs by recruiting permanent staff whenever that is possible. I entirely understand that objective.
	The irony, however, is that only one hospital in the trust's area does not suffer from a shortfall in pharmacy staff, which makes it necessary to employ locums. That hospital is Royal Victoria hospital in Folkestone. The pharmacy at Royal Victoria hospital is fully staffed. There is no need to pay for or provide any locums in Folkestone. In effect, Royal Victoria hospital is being punished for the failure of other hospitals in the area for which the trust is responsible to recruit the necessary staff for their pharmacies.
	So far as the savings are concerned, the strategy of the trust seems to be based on the assumption that pharmacy staff currently employed in Folkestone will readily accept employment at one of the other hospitals in the trust's area. From my preliminary discussions with those involved, that assumption is questionable. In any event, it seems an entirely capricious way of achieving a desirable objective. To punish one hospital and the people whom it serves because of the failure of other hospitals in a particular area to recruit the staff that they need seems perverse, yet that is the principle on which the trust appears to have approached the issue. It is not an acceptable approach, and it should not be accepted without protest.
	The second major saving identified by the trust as a basis for its proposal is the reduced need that would arise, if the proposal were implemented, for stocking medicines at Royal Victoria hospital. Obviously, if no pharmacy services are provided at the hospital, there would be less need to stock medicines at the hospitals. But, save to a very small extent arising out of the need to provide particular quantities of some medicines at any particular location, those savings are largely illusory. The people who currently receive their medicines from the pharmacy at Royal Victoria hospital will still need those medicines. They will have to be supplied from other sources—either other hospitals served by the trust or pharmacies in the general community.
	If the Office of Fair Trading's competition proposals for pharmacies are fully implemented, many of my constituents, particularly those in rural areas, may find it difficult to obtain access to pharmacies, but that is a wider debate for another day.
	What is clear is that this proposal will not reduce the need for medicines among my constituents who obtain their medicines from the pharmacy at Royal Victoria hospital, so the medicines will have to be supplied elsewhere and the cost of stocking elsewhere will therefore rise, either in the other hospitals in the trust's area or in pharmacies in the community. Those savings, therefore, cannot be significant.
	Finally, and even more astonishingly, the trust claims as a saving the consequences of an astonishing anomaly in the way in which VAT is charged on medicines. I confess that I was completely unaware of the anomaly until my attention was focused on it by the trust's proposal, but it apparently exists and I shall be very interested in the Minister's explanation for it.
	Apparently, VAT is chargeable on medicine supplied from a pharmacy in a hospital. It is not chargeable on medicine supplied from a pharmacy in the community. Therefore, the trust argues that the health budget generally in the east Kent area will benefit from the closure of the pharmacy at Royal Victoria hospital because some of the patients who get their medicines from the hospital will instead get their medicines from pharmacies in the community, on which VAT will not be payable. That explanation is quite mind-boggling.
	I have written to the Chancellor of the Exchequer to ask him to explain the anomaly and to say what he proposes to do about it. I very much hope that the Minister will be able to enlighten us in his reply as to the Government's position on that matter.
	My constituents have been unhappy for some years now about the nature and quality of the health care provided to them by East Kent Hospitals NHS trust. I have said on other occasions that if I had in front of me two boxes full of the complaints that I have received from my constituents over the 20 years during which I have had the honour to represent them, and one box represented the complaints that I had in the first 15 years of that period and the other box represented the complaints that I have had in the past five years, the second box would be twice the size of the first.
	I deplore that situation. I have campaigned for some time for steps to be taken to reverse it. The proposal to close the pharmacy at Royal Victoria hospital in Folkestone is but the latest blow to strike my constituents in the area of health care. I do not think that it can be justified. I hope that in his reply the Minister will be able to offer my constituents some assurance.

David Lammy: I congratulate the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) on securing this debate on the proposed closure of the pharmacy department at the Royal Victoria hospital in his constituency. I know from the press cuttings that he has been a staunch defender of the interests of his constituents.
	The NHS plan sets out a challenging 10-year programme for NHS reform. Far-reaching changes are inevitable to try to provide the best possible services for patients in that context, and we all acknowledge the pressures on the service, not only in Kent but throughout the country, that result from trying to increase capacity so that patients can have ready, quick and responsive access to services. We want not only to increase capacity, but at the same time to raise clinical standards generally.
	We must ensure that services are accessible and flexible, and we want to design services around the needs of patients. As part of the modernisation programme, many NHS trusts are considering changes to the way in which they organise their services. We all recognise that hospital services need to change if we are to continue to fulfil patients' needs and to improve access. Matters clearly cannot remain static for ever. There are a number of different pressures on the service, including providers of health services having to live within their means. Those issues, and many others, need to be taken into account as the health service changes.
	The right hon. and learned Gentleman mentioned the financial difficulties that the area faces. I might say that those difficulties go back a considerable way. Over the next three years, services there will benefit from an increase in investment of around 30 per cent., which is similar to other areas—the biggest ever single investment in the NHS—but I recognise the pressures that the whole health service is under. We have a long way to go in terms of increasing capacity after, dare I say, many years of under-investment and a lack of capacity in the system. In the right hon. and learned Gentleman's area, that means a 9 per cent. increase for the Shepway primary care trust and an 8.9 per cent. increase for the Ashford PCT. We have backed the NHS with record levels of sustained investment.
	Through our policy of devolution, we have also placed our strong faith in those who know the NHS best—that is, the staff, patients and people in the local community. Rather than running the NHS by central diktat from Whitehall, it is our policy that primary care trusts, in partnership with local trusts and the strategic health authority, and with their specific local knowledge and expertise, decide the priorities for the NHS locally. That is the context in which to place this debate. The Government provide the funding and it is for the NHS locally—the stakeholders and the patients themselves—to decide how best to use the resources. It is not appropriate for Ministers to decide, in every part of the country, and for every trust, on the direction of travel and how services should be configured. We have made that clear. During the past year, I have made it clear as a Minister at this Dispatch Box on at least four occasions. Primary care trusts, in partnership with local trusts, the strategic health authority and patients, must be responsible for doing that.
	Given that context, it is right and proper that I return to the detail of the issues that the right hon. and learned Gentleman outlined. The Royal Victoria hospital, which is part of the East Kent Hospitals NHS trust, is a community hospital with 41 rehabilitation beds and 16 stroke unit beds. It has a minor injuries unit, a one-stop neurology clinic, day hospital and a range of out-patient services. It employs approximately 237 staff, and I want to thank them and to pay tribute to the hard work that they do for their community every day.
	The trust has made significant progress over recent months, and I should like to spend a few moments outlining that. I know that the right hon. and learned Gentleman sees problems but, whatever he says, there have been improvements to NHS services in the area. The trust has achieved the Government's access targets for having no patients waiting longer than 12 months for in-patient treatment and no patients waiting longer than 21 weeks for out-patient appointments. In addition, the trust has significantly reduced waiting times in its accident and emergency departments and reduced its waiting list size.
	That is not all. The trust is investing in services across the whole of east Kent that will contribute to further improvements in standards and performance. For example, a new £1 million breast screening unit at Kent and Canterbury hospital was opened in May, and a medical ward with an additional 26 beds was opened in January. Last year, a new CT and MRI scanning unit was launched at William Harvey hospital in Ashford. There are also new initiatives to improve the delivery of primary care services. In the right hon. and learned Gentleman's area, nurse practitioners in Shepway are helping to reduce waiting times and improve the service for patients. They are working well to deal with minor health problems, and patients continue to have the opportunity to see a doctor if they wish.
	There are significant developments and improvements in the provision of health care in east Kent. However, I am aware of the significant deficit that faces the right hon. and learned Gentleman's health community in the next few years. I am therefore delighted that everyone has come together to work out a financial recovery plan. I understand that there will be calls to wipe the slate clean and start from scratch, but that is not realistic. The NHS must exist within the available funding, and NHS organisations that overspend should and must repay organisations that have had to forgo resources in order to fund the overspending. We cannot wipe the slate clean. Such an approach would be perceived as penalising those with good financial management performance. It would convey all the wrong messages about responsible managers and move things in the wrong direction.
	We recognise that some individual health bodies face financial pressures. Local circumstances may allow the phased recovery of deficits over several years. Clearly, any such arrangements would have to be subject to the agreement of local providers, commissioners and the managing strategic health authority. In addition, we have provided £100 million in support through the NHS bank to several organisations with the most serious financial problems to ensure the continued delivery of patient services.
	I am advised that the pharmacy department at the Royal Victoria hospital employs four people and dispenses approximately 19,000 items a year compared with 400,000 items a year dispensed by the East Kent Hospitals NHS trust. The trust, which is responsible for the hospital's services, has reviewed its pharmacy services to help tackle the financial position and to adapt to the changing ways of delivering clinical support services. I understand that the trust is supported by its partner primary care trusts and the strategic health authority.
	Although the pharmacy department at the Royal Victoria hospital is fully staffed, the trust has an overall shortage of pharmacists. That means that the trust regularly employs expensive locum staff to cover its vacancies. The proposal to close the pharmacy department at the Royal Victoria hospital has been made because the local health community believes that concentrating the service on other sites in the trust can achieve better value.
	I am advised that the individuals employed in the pharmacy department are crucial to the proposal and are being fully and properly consulted. It is proposed to fit existing pharmaceutical staff at the Royal Victoria hospital into vacancies on other sites, where not only could their expertise be fully used, but staff development opportunities are more readily available. I understand that two of the four staff at the pharmacy department in the Royal Victoria hospital have expressed a willingness to be relocated to an alternative site.
	The right hon. and learned Gentleman says that he is worried that the proposal is simply about money. It is true that the trust has a deficit and that reorganising pharmacy services will save it money. However, it is not simply about saving money. I am advised that the approach has benefits for patients. For example, the pharmaceutical requirements of the hospital's in-patients will be assessed in future by a pharmacist on the ward who has access to the patient's record.
	Throughout the country, hospital pharmacy services are being re-engineered to provide services that are designed more around the patient's needs. That is part of the Government's commitment in "Pharmacy in the Future", which we outlined and has much support in the pharmacy world.
	The Department's medicines management framework, which covers the clinical and cost-effective use of medicines, promotes decision making across local health economies. Medicine management is an organisation-wide issue on which managers, prescribers and pharmacists need to work together to ensure that patients get the best from their medicines.
	I can give the right hon. and learned Gentleman some examples from across the country of pharmacy services that are being reconfigured to the benefit of patients.

Michael Howard: If the contention is that medicines can be provided to hospital patients in a more effective way by doing away with existing pharmacy units and using some of the methods that the Minister has suggested, why on earth are those methods not being introduced in the other hospitals for which the East Kent Hospitals NHS Trust is responsible, in which there is a shortage of pharmacists, rather than in the Royal Victoria hospital in Folkestone, which is the only hospital—so far as I am aware—that is the subject of such proposals?

David Lammy: As I have said, these plans—outlining the way in which we are moving forward with pharmacies—have been outlined in "Pharmacy in the Future", and hospitals are getting around them around the country. There is clearly a financial imperative in the right hon. and learned Gentleman's local context. He has discussed that; I have outlined it. That, however, is not the only issue. Clearly, the fact that only 19,000 prescriptions are given a year will have a bearing on how those services are configured. What must be right is that patients in the Royal Victoria get access to the right pharmacy services. The local trust believes that this proposal will give them access to that, improve services and meet the desire to see the deficit reduced. That must be about balance, and about fiscal accountability. It is right that the local economy should have that discussion.
	Such proposals are also taking shape in other parts of the country. The West Middlesex University hospital provides a pharmacy service to Teddington Memorial hospital, which has around 60 health care for the elderly beds. Northumbria Healthcare NHS Trust provides a medicines supply and clinical pharmacy service to Berwick infirmary and four other small hospitals. The clinical service at Berwick is provided in part by community pharmacists who review patients' medication prior to discharge as part of an LPS—local pharmaceutical services—pilot. Cumberland infirmary provides supply and clinical services to a smaller hospital with medical and care for the elderly beds.
	Pharmacy services can be, and are being, configured in different ways in different parts of the country. This accords with the needs of smaller hospitals, and it is right and proper that individual trusts should look at those needs and make their own assessments. I want to emphasise that it is for them to make their own assessments locally; it is not for me to stand here and say what is right or wrong about what they say. The right hon. and learned Gentleman says that he disagrees with his trust's decision, and that is his right. But, in a sense, that is his subjective analysis of the information with which he has been provided.
	In conclusion, we have provided—

Michael Howard: The Minister is very generous to give way again. He has suggested that he is reaching his conclusion, but he has not yet touched on the VAT anomaly. I hope that he will say something about that before he sits down.

David Lammy: The right hon. and learned Gentleman is quite right to pick me up on that point. There is a situation in which European Community law and the way in which VAT is configured in this country affect hospital services in this way. He has written to the Chancellor on this matter, and I will undertake to work with him to consider it, and to see whether I can write to the right hon. and learned Gentleman about it. I understand that the matter has come up and that it affects pharmacies in particular. As the Minister responsible, it is something that I want to take an interest in.
	We have provided record resources for the NHS, but it must be for primary care trusts to decide how that money is spent, and—in conjunction with local stakeholders—how services should be delivered. I can understand that the pharmacy's closure might set alarm bells ringing locally, but I have been assured that whatever the future of pharmacy services at the Royal Victoria hospital, patients will continue to receive the very best care. A high standard of pharmaceutical services will still be provided.
	Stephen Cook, the trust's director of pharmacy, has himself said:
	"I will not shut the door on the Royal Victoria Hospital pharmacy until I am sure the service in place meets the needs of all our patients. We would not do it if it was going to have a detrimental effect".
	Question put and agreed to.
	Adjourned accordingly at Eight o'clock.